GBP/USD awaits UK traders’ reaction to latest political news/events

With the British traders’ absence due to Spring Bank Holiday on Monday, little reaction to the latest political news/events could be witnessed off-late. As a result, the GBP/USD pair clings to 1.2680 while heading into the London open on Tuesday.

The European Parliament elections couldn’t have been much disappointing for the Tories as Nigel Farage’s recently found Brexit Party topped all the other political parties.

The result exerted downside pressure on to the British Pound (GBP) as it highlights the risk of no-deal Brexit. Though, the UK holiday confined the Cable’s declines.

Additionally, almost 10 headline lawmakers have filed their nominations to replace Theresa May as the UK’s Prime Minister after her departure on June 07. While ex-Foreign Minister Boris Johnson is leading the race, there are some second-tier personalities like housing minister Kit Malthouse that joins the line.

On the Brexit front, no developments took place since Tory coup demanded PM May’s resignation after an absence of progress from cross-party talks.

Even if there are no major economics up for publishing from the UK, expectedly weaker housing and manufacturing data from the US, coupled with soft consumer confidence, could entertain momentum traders together with their response to latest political plays.

Technical Analysis

With the relative strength index (RSI) flashing overbought signals on the daily chart, prices are likely witnessing pullback towards 1.2760-70 region comprising February month low and a descending triangle stretched since early-May. Should prices clear 1.2770, 1.2800 and April month bottom near 1.2865/70 can please buyers.

On the contrary, 1.2600 limits near-term declines, a break of which can recall 1.2480 and January 2018 low near 1.2430 back on the chart.