GBP/USD fails to hold on to recovery gains ahead of the House of Commons session
|- GBP/USD again fails to extend 100-DMA breakout.
- Investors remain cautious ahead of the MPs return to the Parliament after the Supreme Court slammed the UK PM for unlawful behavior.
- Mixed trade/political headlines strengthen the greenback despite stability in risk sentiment.
With the fading optimism after the British Supreme Court judgment joining overall strength of the greenback, GBP/USD drops to 1.2465 while heading into the London open on Wednesday.
The Cable fails to extend Tuesday’s gains amid rising expectations of another political showdown at the United Kingdom’s (UK) House of Commons. The losses could also be attributed to the US Dollar’s (USD) broad strength amid political pessimism surrounding the US-China trade story and the US-Iran geopolitical tussle. Also adding to the political plays is the US House Speak Nancy Pelosi’s formal order to begin inquiry of President Donald Trump’s anticipated meddling in Ukrainian politics.
The British Supreme Court ruled against the UK Prime Minister (PM) Boris Johnson while stating that Mr. Johnson acted “unlawfully” when proroguing the Parliament till October 14. The GBP/USD pair reacted positively to the news as it reduces the odds of a no-deal Brexit.
Following the announcement, the House of Commons Speaker John Bercow announced that the Parliament will reconvene on Wednesday wherein the Commons leader Jacob Rees-Mogg will set out the business plan for the week.
The UK PM Johnson will have to take an early flight from the United Nations General Assembly (UNGA) in the US to reach the House by mid-day as calls of his resignation as on the rise after facing consecutive defeats from the British lawmakers, politicians.
Elsewhere, the Brexit talks are nowhere near to the deal despite the EU’s readiness to offer relaxation to the Irish backstop. The issue is likely to be raised in the upcoming days into the UK’s Parliaments and will add hardships to Mr. Johnson.
Not only political plays concerning the UK, scheduled speeches from the Presidents of Federal Reserve Bank of Chicago and Federal Reserve Bank of Kansas City, Charles Evans and Esther George respectively, coupled with the US New Home Sales for August, will also be in the spotlight.
Technical Analysis
The 100-day simple moving average (DMA) and 61.8% Fibonacci retracement of June-September decline, near 1.2471/67, act as a near-term key level as the daily closing below the same could recall sellers targeting two-week-old rising trend-line, at 1.2428, and 1.2385/80 rest-points. Alternatively, horizontal region including mid-July tops and the current month high, around 1.2580/83, seems to limit the pair’s near-term advances.
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