GBP/USD retraces three-day losses below 1.2200 on UK/US holiday

• GBP/USD sellers catch a breather amid a lack of major catalysts on Spring Bank Holiday.
• UK PM Johnson gets criticized while favoring Adviser Dominic Cummings.
• US-China tussle intensifies with markets awaiting US President Trump’s reaction over the Hong Kong issue.
• Schools in England will restart on June 01, Tories planning to bail out large companies affected by the virus.

GBP/USD seesaws around 1.2180, up 0.05% on a day, during the pre-European session on Monday. In doing so, the Cable pair snaps the previous three-day losing streak on the day when the UK and the US markets are off for a holiday.

Even so, the US-China tussle over Hong Kong keeps the traders worried. As per the latest updates from NBC, the White House National Security Adviser Robert O'Brien cited the odds of levying sanctions on China and Hong Kong if Beijing moves ahead with a proposed national security law. Though US President Donald Trump is yet to embark upon the issue and hence traders await the Republican leaders’ response while catching a breath from the latest risk aversion wave.

On the other hand, UK PM Boris Johnson is accused of wrongdoing by Tory rebels as he favors Adviser Dominic Cummings despite breaking the coronavirus (COVID-19) code of conduct. Elsewhere, the Financial Times came out with the news indicating the Tory government’s efforts to bail out the big firms in the steel and aviation industry that are being hurt by the virus. Further, UK PM Johnson said, by the BBC, to announce the reopening of schools by June 01. In doing so, the Tory leader pays a little heed to the schools restart in Northern Ireland, Wales and Scotland that have a longer time to recall the students.

It’s worth mentioning that the UK government has recently stepped back from allowing to use Huawei’s 5G networks. The Sydney Morning Herald quotes a spokesperson for the British government who said, "Following the US announcement of additional sanctions against Huawei, the National Cyber Security Centre is looking carefully at any impact they could have on the UK's networks."

That said, the market’s risk-tone remains sluggish with the US stock futures flashing mild gains whereas the Asian equities register mixed moves.

Considering the lack of major data/events, the pair traders will keep eyes on the US-China drama for fresh direction.

Technical analysis

A daily closing beyond a 50-day SMA level of 1.2275 can escalate the recovery moves towards 1.2300 and then to the early-month top near 1.2470. Until then, odds for the pair’s drop to refresh the monthly low of 1.2075 remain brighter.

Additional important levels