GBP/USD heads back towards 4-month lows amid growing UK political risks
- UK PM May’s leadership risks continue to hurt the Sterling.
- US-China trade and Brexit concerns to drive sentiment amid lack of fresh UK macro news.
GBP/USD broke its consolidative phase seen in early Asia and resumed its recent bearish momentum as growing concerns over the UK PM May’s resignation are back in play heading towards the European trading.
The Cable remained under pressure after the UK PM May’s new Brexit deal proposal was met with disappointment by her Party’s lawmakers, as the new 10-point document offered nothing new and emphasized on the second referendum. Further, the resignation by the House of Common Leader and a Tory member Andrea Leadsom accentuated the worries over the UK political climate as PM May looks to step down by Friday, as cited by the UK Times.
Adding to the downbeat tone around the higher-yielding GBP, the US-China trade escalation continues to dent the risk sentiment, as reflected by negative Asian equities and Treasury yields. The latest reports that the US has urged the South Korean companies to reject Huawei’s products further fuels the ongoing rift between the US and China.
Looking ahead the risks remain to the downside in the spot, as the UK political uncertainties and trade-related development will continue to keep the markets on the edge. Meanwhile, the US dollar is likely to remain broadly bid, in light of the recent FOMC minutes and ahead of the US Markit PMIs and new homes sales releases. Also, in focus will be a slew of speech by the Fed officials. It’s worth noting that the UK docket remains data empty this Thursday.
GBP/USD Technical Levels
Author
Dhwani Mehta
FXStreet
Residing in Mumbai (India), Dhwani is a Senior Analyst and Manager of the Asian session at FXStreet. She has over 10 years of experience in analyzing and covering the global financial markets, with specialization in Forex and commodities markets.
