- Political woes drag the GBP/USD pair below the 1.32 mark on Monday.
- News of Conservative party members supporting PM May in her stance triggers a modest relief rally.
- US Dollar Index loses momentum before touching the 94 mark.
The GBP/USD pair fluctuated wildly on Monday as investors continued to react to political developments in the U.K. After advancing to its highest level since June 14 at 1.3360, the pair came under a heavy selling pressure after British PM Theresa May's office confirmed the resignation of Foreign Secretary Boris Johnson. Following a sharp drop to 1.3188, the pair retraced a portion of its daily losses and was last seen trading at 1.3255, where it was down 0.25% on the day.
Investors remained cautious as Johnson's resignation heightened fears of Theresa May, who met with Conservative party members, facing a challenge in the parliament. Reports after the meeting clarified that there wouldn't a confidence vote against May and allowed the GBP to erase some of its losses.
Nonetheless, political headlines from the UK are likely to continue to dominate the GBP valuation. In a recently published report, Fitch said that Brexit plan formulated by the cabinet late last week would position the UK for a relatively soft exit from the EU, but it would face significant challenges. "Resignations of David Davis, Boris Johnson highlight uncertainty over political cohesion, policy platform of UK govt "evident" since June 2017 election," the report read.
Technical outlook
The initial resistance for the pair aligns at 1.3320 (50-DMA) ahead of 1.3445 (Jun. 14 low) and 1.3500 (psychological level). On the downside, supports could be seen at 1.3215 (20-DMA), 1.3150 (Jun. 19 low) and 1.3050 (Jun. 28 low).
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
EUR/USD trades weak below 1.0800 amid Good Friday lull, ahead of US PCE
EUR/USD continues its downward trend for the fourth consecutive day, driven by a stronger US Dollar influenced by the hawkish market sentiment surrounding the Federal Reserve and expectations of prolonged higher interest rates.
GBP/USD: The first downside target is seen at the 1.2600–1.2605 zone
GBP/USD trades on a weaker note around 1.2620 during the early European session on Friday. The decline of Pound Sterling is backed by the growing speculation that the BoE will begin the rate-cut cycle this year.
Gold ends Q1 2024 at record highs, what’s next?
Gold is sitting at an all-time high of $2,236, lacking a trading impetus amid holiday-thinned conditions on Good Friday. Most major world markets, including the United States are closed in observance of Holy Friday, leaving volatility around Gold price highly subdued.
Ripple's move above this key level could trigger nearly 50% rally for XRP
Ripple price has overcome a critical resistance level and flipped into a support floor on the weekly time frame. This development happened while XRP tightly consolidated for roughly 250 days.
US core PCE inflation set to ease in February on month as Federal Reserve rate cut bets for June mount
The core Personal Consumption Expenditures Price Index is set to rise 0.3% MoM and 2.8% YoY in February. The revised Summary of Projections showed that policymakers upwardly revised end-2024 core PCE forecast to 2.6% from 2.4%.