GBP/USD: On the bids despite UK’s political stalemate

  • GBP/USD shows little reaction to political/Brexit uncertainty at home amid greenback weakness.
  • Comments from the BOE’s Carney also failed to drag the Cable backward.
  • Dovish Fedspeak continues to weigh over the US Dollar (USD) despite upbeat inflation data from the US.

GBP/USD remains on the road to recovery for the third consecutive day as it takes the bids to 1.2545 heading into the London open on Friday.

The cable showed little reaction to the political and Brexit uncertainty at home as markets concentrate on the USD weakness amid dovish signals from the US Federal Reserve policymakers. Greenback bears are strong enough to ignore recently upbeat Consumer Price Index (CPI) data as the Fed Chair remains pessimistic about the future inflation expectations and favor a 25 basis points (bps) Fed rate cut.

On the other hand, policymakers kept making the UK Prime Minister (PM) hopeful Boris Johnson responsible for recent resignation by the UK’s ambassador to the US. Additionally, forecasts concerning dark days for the British economy in case of a no-deal Brexit kept flowing from industry sources whereas threat level to UK ships in Iranian waters was recently hiked to critical after news of Iran tried to block British tanker in the Persian Gulf.

It should also be noted that the Bank of England (BOE) Governor Mark Carney, in his public appearance on Thursday, continues to highlight risk no-deal Brexit but couldn’t drag the British Pound (GBP) down.

Looking forward, speech from the BOE’s Gertjan Vlieghe will gain higher attention amid lack of major data from the UK whereas Producer Price Index (PPI) numbers from the US and speech by the Federal Reserve Bank of Chicago President Charles Evans could entertain traders afterward.

Technical Analysis

21-day exponential moving average (EMA) level of 1.2597, followed by five-week-old descending trend-line at 1.2642, continue to limit the pair’s near-term upside, which in-turn highlight importance of 1.2440 and current month low near 1.2430 as key supports.

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