GBP/USD Forecast: Riding uptrend support and confused by Trump and Johnson

Confusion can sometimes trigger highly volatile trading and at other times paralyzes any price action – and paralysis is what we are seeing in GBP/USD. 

Boris Johnson – the favorite to become UK PM – has said there is million to one chance the UK will leave the EU without a deal. His words seem like an attempt to soothe party members and the broader public about the chances of a cliff-edge Brexit. However, his strong statement contradicts a previous commitment to leaving the EU by October 31st "do or die." – which were aimed at party members supporting a hard exit out of the bloc.

Johnson was also contradicted by Mark Carney. Governor of the Bank of England. In testimony on Wednesday, Carney said that using an arcane article of the GATT agreement could save the UK from a no-deal Brexit. 

Johnson – known for his colorful style – will likely be in the news today as he competes with Jeremy Hunt for the leadership.

US President Donald Trump and his aides have also sent mixed messages ahead of the all-important summit with Chinese President Xi Jinping. On the one hand, there are reports that the world's largest economies have agreed on a "trade truce" – no new tariffs while negotiations for a trade deal continue. On the other hand, Trump continues threatening China with new duties. 

The president is on his way to Osaka, Japan, for the G-20 summit and his tweets on the topic may rattle markets. The summit is due early on Saturday after markets close.

US data has also been mixed with headline durable goods orders disappointing with a fall of 1.3% while core orders rose by 0.3% – better than had been expected. 

Another substantial US figure is due today – final Gross Domestic Product for the first quarter. Apart from the headline figure, investors are eying underlying inflation, which will likely stay subdued. 

See US Q1 GDP Final Revision Preview: Look ahead not behind

Overall, political developments will likely dominate, only temporarily making way for the data.

GBP/USD Technical Analysis

GBP/USD has been trading above uptrend support (thick black line) and has edged up above the 200 Simple Moving Average on the four-hour chart. On the other hand, momentum is negative. The currency pair seems somewhat listless.

Initial resistance awaits at 1.2710 which provided support early this week. Further up, 1.2780 was the weekly high and it is followed by 1.2815 – a swing high from May. April's low of 1.2870 is next.

Support awaits at Wednesday's low of 1.2680. It is followed by 1.2610 which capped the pair last week, and then by 1.2505 which is June's low and the lowest since January.