GBP/USD extends recovery, eyes on UK Parliamentary vote
|- GBP/USD seems to carry the gains amid large expectations that the UK PM’s Brexit plan will be passed in today’s voting.
- Risk reset and uncertainty surrounding the UK opposition Labour Party’s future also help the cable.
- Headlines concerning Brexit, US-Iran tension and the US ISM Non-Manufacturing PMI will be in focus.
GBP/USD remains mildly bid while taking rounds to 1.3172 ahead of the London open on Tuesday. The cable registered noticeable gains on Monday amid broad US dollar weakness and better than forecast reading of the UK Services PMI. Investors will now follow British political news for fresh impulse amid a lack of major data/events on the calendar. Elsewhere, the US-Middle East tension continues without any major result whereas the US data can entertain traders during the later part of the day.
The UK PM Boris Johnson’s Brexit Withdrawal Agreement Bill will be up for reconsideration in the British House of Commons as the Members of the Parliament (MPs) are set to return from the Christmas holidays. The Bill is expected to get passed easily, giving the Tory leader further edge against the struggling opposition Labour Party which is now searching for the new leader after the humiliating defeat in the general election.
Optimism gets further support from the Sky News’ report that suggests the UK government stands down no-deal Brexit planning. Also supporting the buyers were the UK Express piece mentioning that the British PM said, “the UK will negotiate a post-Brexit free trade deal with the US and EU at the same time as he promises to lead the country out of the bloc by the end of January.”
Given the absence of major data/events from the UK, Brexit headlines will be the key to watch for fresh direction. Elsewhere, the absence of US-Middle East war triggered risk reset while the US-China trade headlines are again crossing the wires. Investors will now look forward to the US data and political headline news for short-term direction.
Ahead of the data, analysts at Westpac say, “The US data calendar is worth watching, with the highlight the non-manufacturing ISM survey for Dec. The consensus is for improvement from 53.9 in Nov to 54.5, with further interest in the employment sub-index for guidance on Friday’s non-farm payrolls data. Also on the slate are Nov factory orders and Nov trade balance.”
Technical Analysis
Prices need to provide a clear break of a short-term symmetrical triangle, currently between 1.3215 and 1.3085, to register major moves.
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