- GBP/USD has been falling well below 1.2700 after Boris Johnson won the first leadership vote.
- US retail sales and a speech by BOE Governor Mark Carney stand out today.
- Friday's four-hour chart shows GBP/USD is battling with uptrend support.
Boris Johnson has one foot in 10 Downing Street says the headline in the Daily Mail – and the usually sensational media outlet cannot be accused of exaggerating this time. The former foreign minister overwhelmed his rivals by receiving 114 votes of his fellow MPs in the first round of the leadership vote – far above Jeremy Hunt, Michael Gove, Dominic Raab, and others.
Three candidates were eliminated and MPs that voted for them may now add to Johnson's support. The next round is held on Tuesday. Even if Johnson receives no additional support but only holds onto his current backers – his place among the shortlist of two candidates that will face the membership is secure. And among party members, Johnson enjoys the support of 54% of members according to Conservative Home.
Johnson said the UK must leave the EU by the October 31st deadline – with or without a deal – raising the risk of a no-deal exit. On the other hand, he does aim to reach a new accord. Markets are trying to assess his future policies.
Bank of England Governor Mark Carney will speak later on and may touch on Brexit. The bank assumes a "smooth exit" and the governor may warn of the risks of an exit which is not smooth. When it comes to moving the pound, the BOE has played second fiddle to political developments of late.
US trade wars, critical data
This is not the case in the US – where trade wars and Fed speculation compete in moving the US dollar. The White House has repeated its threat to slap China with tariffs if Presidents Donald Trump and Xi Jinping do not hold a meeting at the sidelines of the G-20 meetings at the end of the month. Washington says it is moving in the direction of such a summit.
Speculation about the Fed's next move is mounting and the final top-tier indicator is due today. Economists expect US retail sales to rise in May – both on the headline and in the all-important control group. Consumption is central to the US economy.
See US Retail Sales Preview: Return to spender
The last economic indicator for the week is directly related – consumer confidence. The University of Michigan's preliminary survey for June is expected to tick down but remain close to the highs.
See US Michigan Consumer Sentiment Preview: Happiness and caution
Overall, political events and US data stand out today.
GBP/USD Technical Analysis
GBP/USD has dropped below the uptrend support line that has accompanied it in the past ten days. The fall is convincing and Sterling is already breaching the next support line at 1.2640.
Further down, 1.2610 was a low point in early June. The next downside target is 1.2558 – May's bottom and the lowest since January.
Momentum remains to the downside, the Relative Strength Index is leaning lower. Moreover, GBP/USD has lost the 100 Simple Moving Average after losing the 50 SMA earlier in the week.
Initial resistance awaits at 1.2680 which provided support on Thursday. Further up, 1.2705 was a high point on Thursday and provides further resistance. The most considerable cap is at 1.2765 which held the pair down twice in recent weeks – a double top.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended Content
Editors’ Picks
EUR/USD steady below 1.0800 after US PCE meets expectations
EUR/USD remains depressed below 1.0800 after soft French inflation data, amid minimal volatility and thin liquidity on Good Friday. The pair barely reacted to US PCE inflation data, with the Greenback shedding some pips. Fed Chair Jerome Powell set to speak ahead of the weekly close.
GBP/USD hovers around 1.2620 in dull trading
GBP/USD trades sideways above 1.2600 amid a widespread holiday restraining action across financial markets. Investors took a long weekend ahead of critical United States employment data next week. Fed Chair Powell coming up next.
Gold price sits at all-time highs above $2,230
Gold price holds near a fresh all-time high at $2,236 in thinned trading amid the Easter Holiday. Most major world markets remain closed, although the United States published core PCE inflation, the Federal Reserve’s favorite inflation gauge.
Jito price could hit $6 as JTO coils up inside this bullish pattern
Jito (JTO) price has been on an uptrend since forming a local bottom in early January. Since then, JTO has revisited the key swing point formed in early December, suggesting the bulls’ intention to move higher.
Key events in developed markets next week
Next week, the main focus will be inflation and the labour market in the Eurozone. We expect services inflation to be impacted by the easter effect, while the unemployment rate to be unchanged.