GBP/USD remains on recovery mode, all eyes on UK services PMI
|- British political optimism confronts doubts over the US Dollar.
- Political news, UK Services PMI will be in the spotlight.
Although expectations of an end to Brexit deadlock, coupled with overall greenback weakness, help the GBP/USD pair off-late, traders remain cautious ahead of the key services PMI data as the quote seesaws near 1.2700 while heading into the London open on Wednesday.
Tuesday’s 14-month low UK construction PMI could do little harm to the Cable as chances of a good trade deal with the US past-Brexit and speculations favoring Brexit supporter Boris Johnson to become next British PM grew stronger.
Adding to the pair’s strength could be the US Dollar (USD) decline on the back of market’s run for safe-havens amid trade the US-led tussles and not so hawkish comments from the Fed policymakers.
With British lawmakers almost near to make Boris Johnson as the next PM, they might not take too much time for an announcement after present PM Theresa May departs on June 07, which in turn could be extra positive for the Brexit proceedings that have been stopped since more than two weeks.
In addition to political developments surrounding the race to next UK PM and the US President Donald Trump’s British visit, May month Markit services purchasing manager index (PMI) will be the key to forecast fresh moves. The leading indicator to the UK GDP is expected to rise to 50.6 5rom 50.4 earlier.
It should also be noted that comments from the Bank of England’s (BOE) Deputy Governor Dave Ramsden and Fed’s Vice Chair Richard Clarida could offer additional insights to determine near-term trade sentiment.
Technical Analysis
While 1.2650 and latest lows near 1.2560 can limit the pair’s south-run towards December 2018 low around 1.2480, an upside clearance of 1.2750 can propel prices to February month lows around 1.2775 and 1.2800.
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