GBP/USD pays little heed to UK politics ahead of US CPI


  • GBP/USD cares less for the UK political headlines as investors await the US CPI data.
  • The Yellowhammer report confirms previously leaked truths while PM Johnson keep struggling to hold the power.

GBP/USD shows little reaction to the UK’s political headlines during the Parliament close while waiting for the day’s key event. The quote seesaws near 1.2330 heading into the London open on Thursday.

Early during the Asian session, news of the British Government’s release of Yellowhammer report crossed wires. The document consisting nearly 20 expected outcomes, which was already leaked last month, confirmed that the medical, food shortage can take place in a case of no-deal Brexit.

Elsewhere, the United Kingdom’s (UK) Prime Minister (PM) Boris Johnson fails to please the European Union leaders as the Financial Times releases the news that France accuses PM Johnson of seeking individual deals rather than the bloc deal. At home, the opposition Labour party prepares for another election, knowing that the PM will again put the motion forward as soon as the Parliament resumes working on October 14. However, some among the party leaders are struggling to define the motto between another referendum seeking to remain in the EU or to promote seeking a deal with the EU before winning the election and then go for the referendum.

With no major data up from the UK side, investors will pay higher attention to the United States’ (US) August month Consumer Price Index (CPI) data. Even if the Fed gives higher importance to other metrics for knowing the inflation pressure, extreme readings could push the policymakers to rethink on their assumptions. Forecasts suggest, Core CPI declining to 0.2% from 0.3% on MoM while YoY figure may rise to 2.3% from 2.2%. The headline CPI bears the consensus to remain unchanged at 1.8% on a yearly format.

Additionally, the USD Dollar (USD) traders will also be on the lookout for the European Central Bank (ECB) meeting as this will be the second-last from Mario Draghi and is expected to roll out some key monetary policy measures.

Technical Analysis

Buyers will wait for a successful break of 61.8% Fibonacci retracement level of July-September downpour, at 1.2345, to aim for current month high nearing 1.2385 and then target July 23 low close to 1.2425. On the contrary, pair’s declines below 21-day exponential moving average (EMA) level of 1.2310 could drag the quote to 50% Fibonacci Retracement level of 1.2270 and early August tops around 1.2210.

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