GBP/USD extends recent recovery ahead of manufacturing PMI, US Pres. Trump’s UK visit
|- Unearthed speculations of a Fed rate cut favor the Cable despite lack of major positives at home.
- The US President Trump’s UK visit, manufacturing PMI and Brexit talks will be in the spotlight for now.
While trade tensions and sluggish data were already taking a toll on the US Dollar (USD), growing doubts on the US economic strength recently favored the greenback bears, which in turn propelled the GBP/USD pair’s latest recovery towards 1.2655 ahead of the London open on Monday. Investors will now focus on the monthly PMI data while US President Donald Trump’s 3-day visit to London will also grab market attention.
In addition to Barclay’s forecast of two rate-cuts from the US Federal Reserve, Goldman Sachs’ another downward revision to the US economic growth also brightens chances for the Fed to turn dovish during the June meeting.
The British political plays continue to remain against the present Prime Minister Theresa May whose Brexit proposal will be discussed in the UK parliament during the current week.
President Trump has already followed the fashion of supporting Brexit party and proposed that Nigel Farage should lead Brexit talks with the EU. Mr. Trump also threatened Britain to have negative trade consequences if it maintains support for China’ Huawei.
At the data front, May month manufacturing purchasing manager index (PMI) from the UK and US will be the key to watch. While the UK PMI may weaken to 52.4 from 53.1, its counterpart from the US ISM can improve to 53.3 from 52.8.
Additionally, developments surrounding the US trade relations with China and Mexico might also weigh on the USD and hence seem important to follow.
Technical Analysis
Break of 1.2710 and 21-day simple moving average (SMA) near 1.2775 seem necessary for the pair to aim for 1.2810 and April month low near 1.2865.
Should prices take a U-turn, 1.2560, 1.2500 and 1.2480 are likely nearby rests that can be availed during the downpour to the year’s low surrounding 1.2430.
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