GBP/USD remains subdued ahead of Brexit talks at Brussels

UK’s political uncertainty drags the GBP/USD from the monthly top.
British politicians are active to defy no-deal Brexit, expected proroguing of the Parliaments.
All eyes on David Frost’s visit to the EU headquarter.

Anil Panchal FXStreet

Despite surging to a four-week high the previous day, GBP/USD fails to keep the upside momentum intact as expectations of an early election at home and challenges to the UK PM Johnson threaten Cable buyers ahead of Brussels visit by the Chief Brexit Adviser. The quote declines to 1.2272 by the press time of pre-London open on Wednesday.

Prices rallied to monthly high on Tuesday after the cross-party Members of the Parliaments (MPs) pledged to defy no-deal Brexit, even without toppling the UK Prime Minister (PM) Boris Johnson.

During the early Asian session, speculations were on the round that the UK is heading for an early election after British Finance Minister’s office canceled his speech before 24 hours of the announcement of new spending plan. The Chancellor Sajid Javid will now announce fresh spending plan on September 04 that is expectedly having an annual review period versus the earlier three-year timeline, as per the Guardian.

Elsewhere, the opposition Labour party leader Jeremy Corbyn writes to many Tory rebels to support his cause of blocking the no-deal Brexit after MPs smashed his dream of being an interim UK PM. Further, some of the policymakers are preparing for an alternative parliament in case the British PM prorogues the present one.

In the case of the US Dollar (USD), upbeat data and a lack of market response to the US President Donald Trump’s criticism of the Fed’s policies favored the greenback’s run-up. However, risk sentiment remains heavy with the US two-year yields crossing the 10-year ones and signaling a global recession.

Moving on, the UK PM’s Chief Brexit Adviser David Frost’s visit to Brussels will be in the spotlight after the EU’s recent comments showing readiness to accept a workable solution for Irish backstop. The Brexit Sherpa is likely to push the regional leader for Irish backstop solution while visiting the headquarters, which if received positive replies will become a strong plus for the Cable.

Technical Analysis

While 1.2200 and a two-week-old rising trend-line at 1.2120 limit the pair’s near-term declines, 50-day simple moving average and July 17 low around 1.2372/82 becomes the key upside resistance to watch.

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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