- GBP/USD pauses the two-day losing streak as markets welcome the Conservatives’ ability to let the UK PM’s plan intact in the Commons.
- Mild risk-on also contributes to the pair’s recovery.
- Brexit/Iran headlines, comments from the BOE Governor, Fed policymakers will be the key to follow.
GBP/USD stays mildly positive within a choppy range around 1.3100 while heading into the London open on Thursday. The pair recovered during late-Wednesday after the UK’s House of Commons matched market expectations and respected the PM Boris Johnson’s Withdrawal Agreement Bill (WAB). In doing so, traders also ignored downbeat comments from the newly appointed European Commission President Ursula Von Der Leyen. Traders will now focus on the BOE Governor’s remarks for fresh direction.
While matching wide expectations, the UK’s Members of Parliaments (MPs) allowed none of the opposition parties to amend the Tory leader’s WAB, the same give rise to expectations that the UK PM Johnson will be able to make his promises true. With this, markets shrugged off EU President’s statement that it would be impossible for the UK to negotiate a comprehensive deal covering all aspects of Brexit within the timeframe set by UK PM Johnson, i.e. the end of 2020.
Alternatively, the Scottish Parliament rejected the Tory leader’s Brexit bill. However, it doesn’t make a major difference to the Tories as they are holding a majority in the British Parliament.
Risk recovery could also be cited as the US President Donald Trump avoided any direct confrontation with Iran, except for few signals to sanctions, despite the Middle East nation hit the US military bases in Iraq the previous day. Further, no major damage and an open window from Iran to stop the attacks, by calling peace from the US, de-escalate the war fears.
As a result, the US 10-year treasury yields rose back to 1.87% from the low of 1.707% on Wednesday, near 1.86% by the press time.
Moving on, the Bank of England (BOE) Governor Mark Carney is scheduled to speak at The Future of Inflation Targeting Conference, in London. In his latest appearance, the BOE leader mentioned that the central bank can accept negative rates.
Other than the BOE’s Carney, the US Federal Reserve policymakers including Vice Chair Richard Clarida and the New York Fed President John C Williams will also be the key to watch.
Technical Analysis
Unless crossing a descending trend line since December 13, at 1.3180 now, prices are likely to remain soft. As a result, odds of further declines to a 50-day SMA level of 1.3015 can’t be ruled out.
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