GBP/USD: Well bid ahead of UK’s House of Commons, Carney’s Speech
|- GBP/USD bounces off 21-day SMA after first-day of the UK’s Parliament showdown.
- The House leader Jacob Rees-Mogg indicated “an exciting announcement” for Thursday.
- The UK MPs will progress towards no-confidence motion.
With the US Dollar (USD) trimming some of its recent gains, coupled with increasing odds of a soft Brexit, GBP/USD recovers to 1.2375 while heading into the London open on Thursday.
The Cable recently benefited from the heated discussion in the United Kingdom’s (UK) House of Commons that resumed working for the first time after the Prime Minister (PM) Boris Johnson prorogued the Parliament during month-start days. Tories and Labours exchanged rough statements before closing the day with the House Leader Jacob Rees-Mogg announcing adjournment motion for next week for Conservative Party conference. However, the House Leader signaled to offer an exciting announcement on Thursday.
On the other hand, the greenback witnessed some profit-booking after a rally during the previous day. Reasons for the same could range from the US President Donald Trump’s likely impeachment to the mixed statements by the US Federal Reserve policymakers.
Investors will now look forward to how the UK’s Members of the Parliament (MPs) behave during the second day of sitting when the Conservatives have already asked for votes to allow the house adjournment for annual conference.
In a case of the Brexit, the UK PM Johnson indicated optimism to get a trade deal with the EU but Irish counterpart is less positive on it unless the British leader offers any strong solution to the backstop.
It should also be noted that the Bank of England (BOE) Governor Mark Carney is up for speaking at the European Systemic Risk Board annual conference, in Frankfurt. Investors will seek clues of how Brexit can affect the BOE’s future moves during his public appearance.
Other than British political plays and Canrey’s speech, the final reading of the US second quarter (Q2) Gross Domestic Product (GDP) and comments from the Federal Reserve Bank of St. Louis President James Bullard and the Federal Reserve Governor Richard Clarida will also be closely followed for fresh direction.
Technical Analysis
The Cable buyers need to conquer 1.2380/85 area comprising July 17 bottom and early-month high in order to challenge 38.2% Fibonacci retracement of May-September declines, at 1.2425, and 100-day simple moving average (SMA) level of 1.2465. Alternatively, pair’s declines below 21-day SMA around 1.2340 can recall 1.2315 and 1.2245 rest-points.
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