GBP/USD slips below 21-day EMA as proroguing of UK parliament triggers political outrage

• GBP/USD stays on the back foot amid increasing odds of no-deal Brexit after the UK PM got the Queen’s approval to prorogue the Parliaments.
• Cross-party MPs, EU leaders all criticize such a political move.
• UK PM Johnson says it will give “ample time” to discuss issues.

With the United Kingdom (UK) Prime Minister (PM) Boris Johnson’s ability to get the Queen’s approval to prorogue the British Parliaments, renewed fears of the no-deal Brexit weigh on the GBP/USD pair. The quote declines to 1.2200 while heading into the London open on Thursday.

The UK PM Johnson yesterday got the Queen’s approval to close the Parliaments from September 12 to October 14. Even if Mr. Johnson termed it as a move to avail more time for National Health Services (NHS) and security issues before the Brexit deadline of October 31, politicians across the board term it as a move to block odds of a soft Brexit.

While opposition Labour party leader Jeremy Corbyn is on the top to criticize such a move, some among the Tory fraternity, like Scottish Conservatives leader Ruth Davidson were also in line to convey their outrage. Further, the European parliament’s Brexit coordination Guy Verhofstadt termed this as a ‘sinister’ move while some cross-party Members of the Parliaments (MPs) called it a ‘dictatorship’.

Elsewhere, no major updates were available from the UK PM’s Chief Brexit Adviser David Frost despite one European Union (EU) diplomat spotted by the Reuters as lacking expectations of any breakthrough.

However, the reason the GBP/USD pair refrains from a plunge is the US Dollar (USD) weakness on the back of fresh risk aversion wave as pessimism surrounding the US-China relation renews. Also adding to the market uncertainty is the Fed speak, geopolitical tension concerning Hong Kong and anticipation of the rate cuts from the People’s Bank of China (PBOC).

Moving on, traders will keep watching over Brexit headlines wherein some of the members of the European Parliaments (MEPs) plan to trigger the EU rule of law investigation into UK PM Johnson’s government over recent action, as per the Independent. At home, the cross-party MPs are also on a rebellious mood to put forward no-confidence motion against the British PM Johnson even after turning it down a few days ago.

On the other hand, the US second estimate of the second quarter (Q2) 2019 Gross Domestic Product (GDP), Personal Consumer Expenditure Prices and Pending Home Sales data. The forecast suggests, a soft 2.0% annualized GDP versus 2.1% with housing market data likely flashing no growth against 2.8% previous expansion.

Technical Analysis

GBP/USD can take the support of 21-day simple moving average (SMA) level of 1.2153 during its further downside whereas a rising trend-line from August 12, at 1.2120, and August 20 low near 1.2065 can please sellers then after. Alternatively, recent high near 1.2310 and 50-day SMA level near 1.2360 can keep the pair’s upside limited.