GBP/USD recovers to 1.2600 as UK politics become clearer

Boris Johnson gets additional support from Matt Hancock.
Increasing chances of a break to Brexit deadlock.
Politics remain on the spotlight amid lack of economic data on hand.

Anil Panchal FXStreet

While overall US Dollar (USD) strength continues to dominate market sentiment, the GBP/USD pair recovers to near 1.2600 as an outcome of the UK PM’s race becomes clearer during early Monday.

Although ex-Foreign Minister Boris Johnson has already conquered one obstacle to being the UK PM with a huge majority, support from one of the outgoing candidates to the race and the British Health Minister Matt Hancock strengthens his claim to the Prime Minister’s position.

During the first round of voting for the Tory leader, Boris Johnson got as many as 114 votes exceeding all the rest by quite a large margin whereas 3 candidates out of 10 couldn’t even get the required 15 votes and had to withdraw from the race.

At the start of the week, the UK Times releases a report that out of the 7 remaining candidates for the PM post, Matt Hancock also withdraws and support Borish Johnson, which in turn reduces political uncertainty in the UK.

Even if Borish Johnson is considered a Brexit hardliner, Mr. Hancock said he’s the one to unite the UK amid Brexit. As a result, investors turn positive to the British Pound (GBP) expecting a break of Brexit deadlock.

Investors may now seek clues from Tuesday’s another round of voting for the position that may further funnel down the number from currently 6. Also in the radar will be the US-China trade noise and the FOMC meeting.

Technical Analysis

An area comprising May 31 high and June 10 low between 1.2645 and 1.2655 seem near-term important resistance for the pair to clear in search of visiting 1.2710 and current month high around 1.2770.

Should prices keep trading down, bears may await a dip beneath 1.2560 in order to aim for December 2018 lows near 1.2480 and the year 2019 bottom around 1.2430.

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.

EUR/USD appears supported by the 200-day SMA, for now

Following an early pullback to multi-week lows near 1.1670, EUR/USD now manages to reclaim the 1.1700 region as the NA session draws to a close on Monday. The steep retracement in spot follows the equally strong move higher in the US Dollar, as investors continue to assess the geopolitical landscape in the wake of the US and Israel attacks on Iran.

GBP/USD hits new yearly lows near 1.3300

GBP/USD adds to the recent bearish tone, approaching to the key 1.3300 support to reach fresh YTD troughs against the backdrop of the robust performance of the US Dollar. Indeed, Cable’s decline comes amid the firm demand for the safe-haven space in the wake of the US and Israel attacks to Iran.

Gold eases some ground, approaches $5,300

Gold now surrenders part of the earlier advance, reshifting its attenton to the $5,300 zone per troy ounce at the beginning of the week. Indeed, the yellow metal’s firm performance appears propped up by incresing geopolitical jitters in the Middle East, which at the same time fuels the demand for the safe-haven space.