- GBP/USD struggles to extend the latest recovery ahead of the UK employment data.
- British PM prorogued the Parliament after failing to gain support for an early election.
- UK lawmakers will return to desks on October 14.
With the UK PM’s refrain to accept another defeat in calling the early election, needless to mention the failure of blocking a law that stops no-deal Brexit, the UK politics was quite active recently before the British Parliament’s prorogation for five-weeks to October 14. As a result, GBP/USD stops the latest recovery while taking rounds to 1.2340 ahead of the London open on Tuesday.
The United Kingdom’s (UK) Prime Minister (PM) Boris Johnson again put forward a motion to call an early general election sometime during today’s Asian session. However, he couldn’t lure British lawmakers that are worried for the Tory leader’s preference for no-deal Brexit and hence a failure led him to use the Queen’s support for proroguing the Parliament.
Although Conservatives are of the view to continue Brexit talks with the EU during this five week's time, investors would rather concentrate more on the latest employment data for fresh impulse. Among them, the headline Unemployment Rate for three months till July is expected to remain unchanged while Average Earnings including Bonus for (3Mo/Yr) could weaken to 3.8% from 3.9%. It should also be noted that Claimant Count Change has mostly been upbeat off-late with the July month figures being at 28K. The Bank of England (BOE) has been hawkish in its recent appearances and might gain support if today’s jobs data flashes positive outcome.
On the other hand, positive signals concerning the US-China trade deal are likely favoring the global risk sentiment while tension between the US and the Middle East, coupled with the UK-Iran tussle, suggest remaining cautious.
The US economic calendar will repeat Monday’s pattern of no top-tier releases. However, JOLTS Job Openings for July, expected 7.300M versus 7.348M prior, could entertain traders in the meantime.
Technical Analysis
A five-week-old rising trend-line and mid-July low near 1.2380/85 offers an immediate upside barrier during the run-up to aim for 100-day simple moving average (SMA) around 1.2533. Meanwhile, 50-day SMA level of 1.2290 and 1.2220/15 may act as nearby supports to watch in a case pair’s pullback.
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