- GBP/USD fails to carry earlier recovery forward amid Brexit/political uncertainty.
- The US Dollar (USD) recovery on the back of the latest risk-on also favors the pullback.
- June month employment data from the UK and July month US inflation numbers become crucial in addition to trade/political news.
Given the latest Brexit-negative headlines and fresh risk-on, GBP/USD again tilts southwards as it trades near 1.2065 ahead of the UK open on Tuesday.
Following the news that some of the British lawmakers are secretly plotting to stop the Prime Minister (PM) Boris Johnson from his “do or die” Brexit pledge, confirmation from the Guardian came out mentioning that September 09 is the date on which the parliamentary battle to stop the PM from exiting the EU without deal will begin. However, the PM Johnson is less worried about the same, as the Sun spots Mr. Johnson expecting no action by the EU unless witnessing the end of the Parliament drama while also trying to safeguard Ireland with a deal at the last moment.
The latest improvement in the market’s risk tone amid the absence of escalation in Hong Kong protests, likely trade talks between the US and China, coupled with upbeat headlines from South Korea and Australia. With this, the 10-year US treasury yields take a U-turn from a previous loss of 10 basis points to 1.64%.
While trade/political news will keep offering background music to the market players, June month average earnings and unemployment rate, together with July month claimant count change, from the UK and the US CPI data will also gain major attention.
The UK Average Earnings Excluding Bonus (3Mo/Yr) is likely to rise from 3.6% to 3.8% during June with Unemployment Rate expected to remain unchanged at 3.8%. Further, Claimant Count Change could slip to 22.8K from 38.0K. On the other hand, the US Consumer Price Index (CPI) may improve but the core data excluding food and energy can keep portraying low price pressure.
While 1.2015, 1.2000 and 2017 low near 1.1987 can keep entertaining sellers amid frequent bounces due to oversold conditions of 14-day relative strength index (RSI), a 12-day long trend-line resistance at 1.2083 becomes immediately important as it holds the key to pair’s run-up towards monthly high near 1.2210.
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