GBP/USD: Stabilizing near 5-month low amid political/Brexit uncertainty
|- Doubts of the UK’s economic strength, political future gain attention.
- The second round of Tory voting, speech from BoE’s Carney in the spotlight.
With the growing challenges to the UK’s economy joining political uncertainty surrounding the race to be the British Prime Minister, the GBP/USD pair slipped to the fresh five-month low on Monday and is currently stabilizes near 1.2540 during early Tuesday.
Not only pessimistic survey results from the British Chambers of Commerce but sluggish housing data from the UK also highlights fears that the economy is in a fragile state and not be able to bear the shock of hard Brexit.
At the political front, the lead candidate for the UK PM Boris Johnson avoided a television debate where soft Brexit supporters ruled the discussion. The same stirs up the uncertainty ahead of today’s second round of Tory voting.
Looking forward, investors will give higher importance to the Bank of England’s (BOE) Governor Mark Carney’s speech at the ECB forum in Sintra together with results of Tory leadership contest where six out of previous 10 candidates will be voted to lead the nation.
While BOE’s Carney is less likely to mention any negative statements concerning his recent upbeat appearance, chances of citing Brexit uncertainty as a greater challenge can’t be ruled out. On the other hand, any surprise results from the Tory voting could trigger the Cable’s wild moves.
Technical Analysis
Having breached May month low, December 2018 bottom surrounding 1.2480 and then the year 2019 low near 1.2430 are likely next on the bears’ radar whereas an upside break of 1.2560 becomes necessary for the pair to aim for recovery targeting 1.2660 and 1.2710 numbers to the north
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