GBP/USD: Holding tightly above 1.2500 amid Brexit uncertainty
|- Tories keep supporting October 31 Brexit while Labour approaches trade unions to gain support for another referendum, blocking no-deal Brexit.
- Phillip Hammond stands ready to extend PM May’s legacy program in return for Tory support on blocking no-deal Brexit.
- Fed speakers, political/trade headlines will be on the spotlight.
Even if some at the ruling Tory party continues to aim for no-deal Brexit, uncertainty surrounding the UK’s exit drag the GBP/USD pair as it takes the rounds to 1.2510 ahead of the London open on Tuesday.
The British Finance Minister Phillip Hammond recently crossed the wires as he offered the present Prime Minister (PM) Theresa May an extension to her legacy projects if she offers Tory support to blocking no-deal Brexit.
On the other hand, the front runner to the PM’s race Boris Johnson said that the Tories don’t need any other party’s support for Brexit while reiterating his previous pledge to crash out of the bloc on October 31.
Elsewhere, the opposition Labour party approached key trade unions in an effort to garner support for another referendum and blocking no deal Brexit if they come to power in general election.
At the US, trade tensions with China remain elevated while investors await fresh clues from the Federal Reserve policymakers, up for speeches during the day, to predict future monetary easing efforts by the US central bank. Among the Fed policymakers, Chairman Jerome Powell, Federal Reserve Bank of St. Louis President James Bullard and the Federal Reserve Bank of Atlanta Chief Raphael Bostic will be on the spotlight.
Given the lack of data, investors will keep an eye over political/trade news headlines for fresh impulse.
Technical Analysis
While 14-day relative strength index (RSI) is near to the oversold conditions, December 2018 low around 1.2480 and the year 2019 bottom close to 1.2440 can trigger the pair’s pullback, if not then chances of witnessing a plunge to 1.2400 can’t be denied. On the upside, 1.2610 and a late-June low around 1.2660 become key resistances for buyers to watch during the pullback.
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