GBP/USD recovers to 1.2600 as UK politics become clearer
|- Boris Johnson gets additional support from Matt Hancock.
- Increasing chances of a break to Brexit deadlock.
- Politics remain on the spotlight amid lack of economic data on hand.
While overall US Dollar (USD) strength continues to dominate market sentiment, the GBP/USD pair recovers to near 1.2600 as an outcome of the UK PM’s race becomes clearer during early Monday.
Although ex-Foreign Minister Boris Johnson has already conquered one obstacle to being the UK PM with a huge majority, support from one of the outgoing candidates to the race and the British Health Minister Matt Hancock strengthens his claim to the Prime Minister’s position.
During the first round of voting for the Tory leader, Boris Johnson got as many as 114 votes exceeding all the rest by quite a large margin whereas 3 candidates out of 10 couldn’t even get the required 15 votes and had to withdraw from the race.
At the start of the week, the UK Times releases a report that out of the 7 remaining candidates for the PM post, Matt Hancock also withdraws and support Borish Johnson, which in turn reduces political uncertainty in the UK.
Even if Borish Johnson is considered a Brexit hardliner, Mr. Hancock said he’s the one to unite the UK amid Brexit. As a result, investors turn positive to the British Pound (GBP) expecting a break of Brexit deadlock.
Investors may now seek clues from Tuesday’s another round of voting for the position that may further funnel down the number from currently 6. Also in the radar will be the US-China trade noise and the FOMC meeting.
Technical Analysis
An area comprising May 31 high and June 10 low between 1.2645 and 1.2655 seem near-term important resistance for the pair to clear in search of visiting 1.2710 and current month high around 1.2770.
Should prices keep trading down, bears may await a dip beneath 1.2560 in order to aim for December 2018 lows near 1.2480 and the year 2019 bottom around 1.2430.
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