GBP/USD sellers catch a breath ahead of UK Services PMI
- GBP/USD stops two-day losing streak amid the broad USD pullback.
- Risk reshuffle, catalysts doubting the US monetary policy, debt problem seem to have played their role.
- Markit PMIs from the UK and the US will offer intermediate directions.
GBP/USD isn’t left behind, as far as the US dollar’s (USD) latest pullback is concerned, which in turn probes the recent declines, while trading around 1.3085, ahead of the London open on Monday. Traders will now keep eyes on the UK Services PMI for fresh impulse amid broad risk-off.
The USD is likely consolidating the latest gains amid a slew of catalysts that push buyers to re-think on their risk forecasts. This includes Iran/Iraq’s capacity to confront the US and the global leaders’ push to de-escalate the war-like tension.
Also contributing to the greenback’s recent pullback are comments from the US Federal Reserve (Fed) Bank of New York President John Williams and headlines from China’s Global Times (GT). While the Fed policymaker’s support for easy money policy could challenge the likely rate hikes, GT’s point that the US debt problem is out of control seems to have a ground.
On the other hand, the UK PM and the Foreign Secretary Dominic Raab have indirectly shown their support to the US killing of Iranian General Qassem Soleimani. However, Britain stays in support of Germany and France to try to tame the risk of war.
Elsewhere, the UK’s opposition Labour Party will determine the timetable for the election of its next leader on Monday. The lead contender Keir Starmer seems to have accepted the Brexit whereas Jess Phillips suggests she might seek to rejoin EU if Brexit fails.
It should also be noted that the UK PM will meet Ursula von der Leyen, European Commission President on Wednesday and could discuss the Brexit proceedings. However, the Daily Mail suggests that the senior Tory leaders urge Boris Johnson to kick off parallel post-Brexit trade talks with the US to put pressure on the EU and stop Brussels ‘dragging its feet’ over striking a deal by the end of 2020.
While December month’s final readings of the UK Services PMI, expected 49.2 from 49.00 prior, acts as an immediate catalyst, political/Brexit headlines and the US Markit numbers will be worth to watch.
Technical Analysis
An area between 50-day and 21-day SMA, around 120 pips inside 1.3000 and 1.3120 respectively, limits the pair’s short-term moves.
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.
