GBP/USD: Buyers await UK PMI, political news to extend latest up-move
|- Greenback weakness supersedes political pessimism in the UK.
- News from the UK President Trump’s UK visit and Fed Chair’s speech will be the key.
While expectations of a Fed rate cut and diminishing yields mostly drag the US Dollar (USD) down, the GBP/USD pair awaits fresh clues to stretch recent advances as it clings to 1.2665 ahead of the London open on Tuesday.
Fears of the US-led trade tension to weigh on the global economy have lately been highlighting the US treasury yields which slumped to a fresh 20-month low on Monday while recovering nearly 2 basis points to 2.107% during the press time.
Adding to the USD weakness could be speculations that sluggish data will push the Federal Reserve to refrain from its monetary policy tightening and rather announce the Fed rate cut during the present year.
Talking about the politics, the US President Donald Trump is in the UK for a three-day visit and has mostly tried to push the British government against China’s Huawei. However, the present PM Theresa May is likely to resist the same during today’s meeting with President Trump.
Also, Brexit deadlock remains far from solution as PM May has already stepped back from putting any proposals for vote during this week and shifted the burden to next PM, which in turn could raise possibility of a hard Brexit as both the influential lawmakers from the UK, namely Boris Johnson and Nigel Farage, are pressing for hard Brexit.
Other than political developments surrounding trade and Brexit, UK’s May month construction purchasing manager index (PMI), the US factory orders for April and speech from the Federal Reserve Chairman Jerome Powell will also be in the spotlight.
The UK PMI is expected to remain unchanged at 50.5 whereas the UK factory orders might contract to -0.9% from +1.9% previous growth. Further, statements concerning the Fed’s future policy moves will be closely observed during Mr. Powell’s speech at an event hosted by the Federal Reserve Bank of Chicago.
Technical Analysis
A successful break of 1.2670, including mid-January low, can propel the quote in the direction to 1.2710 and then to February bottom around 1.2775.
Alternatively, 1.2580, 1.2550 and December 2018 lows surrounding 1.2480 can keep entertaining sellers.
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