GBP/USD: Buyers await fresh hints to shore up odds for soft Brexit
|- US Dollar (USD) pullback, fresh optimism surrounding Brexit triggers the GBP/USD recovery.
- The UK BRC Retail Sales and trade/political headlines can direct near-term trade sentiment amid lack of scheduled data.
While fresh doubts over the US-China trade truce and the US President Donald Trump’s comments triggered the USD’s early-day pullback to 1.2530, expectations of a soft Brexit help the GBP/USD pair to stop declining further ahead of the London open Monday.
The Cable dropped heavily on Friday after the US Nonfarm Payrolls dimmed prospects of increased monetary easing from the US Federal Reserve. Also, uncertainty surrounding the Brexit added further weakness into the pair.
However, President’s Donald Trump’s criticism to the Fed’s monetary policy tightening and fresh concerns about the less likeliness of a trade deal between the US and China, from Chinese media, triggered the greenback’s dip profit booking amid early Asian session.
On the other hand, former Brexit Secretary Dominic Raab and an influential Troy member Rory Stewart are tightening their belts to confront the UK Prime Minister (PM) candidate Boris Johnson if at all he wins the PM race.
The front runner clings to his previous pledge of crashing out of the EU, be it with or without a deal, but Dominic Raab threatens to adjourn the Parliament if he fails to get enough support for no-deal Brexit proposal. Additionally, Rory Stewart opens the gate to bypass the decision-making body and form an “alternative parliament” with a retired speaker to back the UK’s soft exit from the block.
Although latest clues from Britain have been increasing the odds for a soft Brexit, it is still in the nascent stage to confirm anything as uncertainty surrounding the PM’s race looms large. Elsewhere, trade talks between the US and China will gain momentum during this week; though, few expect a deal to take place amid differences on both the sides.
Furthermore, UK BRC Like-For-Like Retail Sales (YoY) is expected to increase +0.8% from -3.0% decline in June.
Technical Analysis
Not only 1.2610 but June 27 low near 1.2660 also challenges the Cable’s recent U-turn, which highlights the importance of December 2018 low surrounding 1.2480, the year 2019 bottom close to 1.2440 and 1.2400 round figure.
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