GBP/USD: All eyes on UK Manufacturing PMI, Brexit plan

Despite a slew of political headlines from the UK during the early Asian session, the GBP/USD pair stays modestly unchanged, while being under pressure, as it takes rounds to 1.2285 ahead of the London open on Monday.

The UK Telegraph’s news release that the Prime Minister (PM) Boris Johnson will reveal his Brexit secret to the EU went largely unnoticed as a speculated leak from the proposals indicate multiple checks to be the solution to the Irish backstop, which was quickly turned down by Ireland’s deputy Prime Minister Simon Convey. Also increasing the downside pressure was the report suggesting the British Supreme Court’s readiness to hear any plea against the Tory Leader Johnson if he refrains from obeying the Benn Bill that pushes him towards requesting Brexit extension.

Further, an issue concerning the PM Johnson’s inappropriate action with a press reporter before a decade exerted additional pressure on the United Kingdom (UK) leader while he is already undergoing charges of conflicting interests when being the London Mayor.

At the domestic front, the opposition seems to divert their attention from a snap election to the Brexit proposal and a referendum, which in turn could magnify lawmakers’ response to the Tory proposal, if revealed after the official communication to the European Union.

On the other hand, the US Dollar (USD) stood strong against the majority of its counterparts amid on-going risk-safety wave and recently upbeat comments from the Federal Reserve officials.

While September month manufacturing activity numbers from the UK and the United States (US) will decorate the economic calendar, issues concerning the Brexit plan, the on-going Conservative Conference and domestic politics at Britain can keep traders busy during the day. The forecast suggests, the UK Manufacturing Purchasing Managers’ Index (PMI) to drop to 47.0 versus 47.4 while the US ISM Manufacturing PMI could increase to 50.0 from 49.1.

Technical Analysis

The pair seems to refrain from much momentum unless clearing 21/50-day SMA range between 1.2365 and 1.2260 levels. However, the bearish signal from the 12-bar moving average convergence and divergence (MACD) increases the odds for further declines to 1.2200 on the downside break. Meanwhile, pair’s sustained run-up beyond 1.2366 could propel prices to 1.2400 and 100-day SMA level of 1.2445.