GBP/USD Forecast: Bears in control as bullish Boris Johnson fails to impress

With 62 days left to Brexit, prime minister Boris Johnson wants to step up the tempo of negotiations and meet twice a week. His bullish approach has been met with skepticism – analysts see it as a ploy to keep his party together.

Many see the suspension of parliament as an attempt to ram through a hard Brexit. By calling for more intense negotiations, Johnson is trying to convince skeptics in his own party to stay by his side. Ruth Davidson, leader of the Scottish Tories, has quit the party on Thursday. While she cited personal reasons, the popular leader also stressed the differences she had with the leader. George Young, a prominent Conservative peer in the House of Lords, also quit in protest of the move.

It is essential to remember that the EU rejects dropping the controversial Irish backstop from the Brexit accord. Irish foreign minister Simon Coveney has said that the UK has no credible Brexit proposals. Even if the EU were to accept abandoning the backstop, there is a group of hardline Brexiteers that oppose other parts of the accord and pledged to vote against it.

Courts in London, Belfast, and Edinburgh will hear urgent appeals to stop the proroguing of the House of Commons – which forces a recess between mid-September to mid-October. However, the highly controversial move will probably be approved by the justices.

Opposition parties are ramping up their efforts for a battle in the few days that parliament will be in session from Tuesday, September 3. An anti-no-deal is in the works and tabling a vote of no confidence (VONC) is also on the cards. Kenneth Clarke – the veteran Conservative MP that has been considered as caretaker PM – has said he probably would support Labour leader Jeremy Corbyn for the top job. However, other Tories will find it hard to stomach supporting the hard-left leader.

Brexit has been influencing consumers. The GfK Consumer Confidence measure for August dropped to -14 – a low point is seen in January and in 2013. 

Trade calm

Global markets remain calm after President Donald Trump talked about ongoing negotiations with China. Beijing has hinted it will not immediately respond to the upcoming US tariffs due on Sunday, September 1st. The calm may be broken by further comments from both sides.

The Federal Reserve's preferred measure of inflation – Personal Consumer Expenditure (PCE) is due out today. Economists expect it to remain unchanged at 1.6% year on year in July despite a small acceleration in parallel inflation read. 

See US PCE Price Index preview: A brief history of inflation targets

Overall, the focus remains on Brexit, with trade wars playing second fiddle and data left behind.

GBP/USD Technical Analysis

GBP/USD continues suffering from downward momentum on the four-hour chart with after falling below the 50 Simple Moving Average and the uptrend support line.

Critical resistance awaits at 1.1255, which is the convergence of the 200 SMA and this week's low, that was seen on Wednesday. Further down, support awaits at 1.2115, which provided support last week. It is followed by 1.2065 which was last week's low, and by the 2019 trough of 1.2015. 

Resistance awaits at 1.2195 which is the daily high, followed by 1.2235, another confluence – of Thursday's high and the 100 SMA. Next, we find 1.2265, and 1.2310.