GBP/USD benefits from USD weakness, positives from UK PM’s race

While the US Federal Reserve’s bearish move initially portrayed the USD’s declines, latest risk-off sentiment and positives from the British politics favor the GBP/USD pair’s upside that ranges around 1-week high to 1.2713 ahead of the UK open on Friday. Investors may now concentrate on how the final two candidates for the UK PM’s post prepare for the victory while second-tier US data could also act as near-term catalysts.

At the end of five Tory voting rounds, Boris Johnson and Jeremy Hunt stood on the top of all other candidates for the British Prime Minister’s (PM) post. They now will begin their campaign from Saturday to lead in the 160K poll ballots by the Conservatives. The result of which will roll out on July 22.

Investors recently took some more greenbacks off from their list as likely political rift between the US, Iran and Saudi Arabia could derail the US economy at the time when global central bankers, including the Fed, have turned bear.

Even if there are no major data from the UK scheduled for publishing today, the US Markit Purchasing Manager Index (PMI) and Existing Home Sales may decorate the economic calendar.

The US Markit Manufacturing PMI may slip to 50.4 from 50.5 while Services PMI could increase to 51.0 from 50.9 amid June. Further, the Existing Home Sales is expected to increase to 5.25 million versus 5.19 million during May month.

In case of the political plays, fresh statements from the finalists of the UK PM’s race and macro geopolitical developments could direct near-term trade sentiment.

Technical Analysis

Unless breaking a six-week-old resistance-turned-support, at 1.2665, chances of the quote’s pullback to 1.2610 and 1.2580 are fewer, which in turn increases the scope for the pair’s extended rise in the direction to the present month’s high around 1.2765 and 50-day SMA level of 1.2830.