GBP/USD pulls back from 2-week low ahead of Brexit talks, Parliament drama

GBP/USD sellers catch a breath after two consecutive days of declines.
Political drama against the UK PM continues amid a lack of Brexit progress.
All eyes of UK-EU Brexit negotiators’ meet in Brussels.

Anil Panchal FXStreet

GBP/USD traders seem to be tired of Brexit/political deadlock as the quote bounces off two-week low while taking the bids to 1.2330 ahead of the London open on Friday.

The United Kingdom’s (UK) Prime Minister (PM) Boris Johnson witnessed another defeat in the House of Commons while applying for a short recess to emphasize on the Conservative Party’s annual conference starting from Sunday. Additionally, opposition targeted the PM’s language and a lack of getting Brexit results to further humiliate the Tory leader.

Not only the opposition Labour party but ex-Tory PM John Major also criticized the PM Johnson and indicated that he might use Privy Council to overcome Brexit extension laws. Furthermore, Scottish national party now seems to have likened the Labour party leader Jeremy Corbyn for the post of interim PM should there be a snap election. The House Leader Jacob Rees-Mogg has given an open offer to all opponents to table a motion to call for a no-confidence vote in the government and trigger the snap election. However, nobody dares to challenge PM Johnson fearing defeat ahead of the Brexit.

Investors will now look forward to the meeting between the Brexit Secretary Steve Barclay and EU chief Brexit negotiator Michel Barnier in Brussels amid The Sun’s story telling the members of the Parliament exerting pressure on the Tory diplomats to give concessions to the EU to get the Brexit progress. However, the EU leaders are less in a mood, neither do they expect any breakthrough from today’s talks considering the PM’s struggle at the British Parliament.

On the other hand, the US Dollar (USD) remains firm even with looming political uncertainty and a major change in data/events. The reason might be the comparatively lesser dovish monetary policy stance of the US Federal Reserve.

Risk-tone also stays sidelined even after the CNBC’s report claiming the US-China trade talks in Washington during October 10-11. The US 10-year Treasury yields cling to 1.6% by the press time.

On the economic calendar, no statistics are up from the UK while the US Durable Goods Orders, Michigan Consumer Sentiment Index and Personal Spending can entertain traders during the late-Friday.

Technical Analysis

Pair’s sustained trading below 21-day simple moving average (DMA) level of 1.2350 drag it towards 1.2272/66 support-confluence including 50-DMA and 38.2% Fibonacci retracement of June-September downpour. However, an upside break of 1.2350 could trigger fresh pullback towards 1.2415 and 61.8% Fibonacci retracement near 1.2470.

Author

Anil Panchal

FXStreet

Anil Panchal has nearly 15 years of experience in tracking financial markets. With a keen interest in macroeconomics, Anil aptly tracks global news/updates and stays well-informed about the global financial moves and their implications.

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