GBP/USD: All eyes on UK PM Johnson’s EU trip after Yellowhammer leak

GBP/USD remains on the recovery mode as it trades near 1.2150 while heading into the London open on Monday.

The Cable carries previous strength forward as British lawmakers, including Cabinet’s Brexit Minister Michael Gove and the Energy Minister Kwasi Kwarteng, term the leak of Yellowhammer report as an act of scaremongering ahead of the UK Prime Minister (PM) Boris Johnson’s visit to the EU.

The Sunday Times reported the leak of a confidential Yellowhammer report, prepared by the UK’s Government, during the weekend. The report consists of multiple serious warnings about transport disruption and shortages of food, water and medicines. As per The Guardian, Tories considered it as an effort by Theresa May’s former minister to spoil the UK PM’s visit to the EU. The UK PM is scheduled to visit Germany and France on Wednesday and Thursday respectively during this week.

Recovery in risk sentiment and likely receding tension between the UK and Iran, after Britain recently released Iranian oil tanker from Gibraltar, could also be considered as additional reasons for the price momentum. As a result, the 10-year US treasury yields rise nearly 4 basis points (bps) to 1.583%.

While the US President Donald Trump’s latest media remarks have somewhat less impact on the Cable, a lack of economic data/event on the calendar will keep pushing traders to search for trade/political headlines for fresh moves.

Other than UK politics, Wednesday’s the Federal Open Market Committee (FOMC) Minutes and Thursday’s Jackson Hole Symposium will also be the keys to watch.

Technical Analysis

Multiple supports around 1.2100 will limit the pair’s downside before 1.2015 and 1.2000 rest-points come into play. Alternatively, 1.2210/15 area comprising July 29 low and August 06 high holds the gate for the quote’s run-up towards 1.2250 and mid-July low surrounding 1.2380.