GBP/USD rebounds on Brexit news ahead of the London open
- The GBP/USD pair trades around 1.2865 during early Thursday.
- The pair reversed from 1.2840 on news of likely delayed Brexit.
- The 1.2840 may offer immediate support contrast to 1.2920 acting as nearby resistance.
The British Pound (GBP) took a U-turn from 1.2840 against the USD while heading towards the UK markets’ open on Thursday. The pair declined Wednesday as softer than expected inflation numbers from the UK contrasted with the US consumer price index (CPI) statistics. The GBP/USD pair, also known as the Cable, received boost earlier in the day when The Times reported the news that 40 former British Ambassadors call on the Prime Minister Theresa May to delay Brexit.
On Wednesday, the GBP/USD pair weakened as January month the UK CPI lagged behind 1.9% market consensus to 1.8% on a yearly basis whereas monthly figures shrank more than -0.7% forecast to -0.8%. The British inflation numbers were in contrast to the US releases that said headline CPI YoY rose to 1.6% from 1.5% expectations while beating the 2.1% forecast for the Core CPI YoY by being unchanged at 2.2% during the first month of 2019.
At the start of Thursday, when speculations were already favoring delayed Brexit deadline, The Times reported that 40 ex-British Ambassadors urged the UK PM May to delay the Brexit deadline from presently holding 29 March. The news helped the GBP to register across the board strong on hopes of soft and/or delayed Brexit.
Looking forward, lack of British economics to publish puts higher emphasis on developments at the UK Parliament. PM May is still trying hard to get her plan through parliament rather than tabling the delay.
On the flip side, the US Treasury Secretary Steve Mnuchin and the trade representative Robert Lighthizer will start two-day trade negotiation with their Chinese counterparts headed by the President's top aide Liu He. Recent comments from the Treasury Secretary and the President signalled brighter chances of a trade deal, if not then an extension of tariffs by nearly 60 days from the March 01 deadline.
In addition to the politics, monthly release of US Retail Sales, likely to register soft growth figure of 0.1% from 0.2% prior on a monthly basis, can also play its role.
GBP/USD Technical Analysis
The pair needs to surpass the 1.2920 upside barrier in order to aim for 1.2980 and 1.3000 mark.
On the downside break of 1.2840, sellers can aim for 1.2810 and the 1.2780 supoprts.
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.
