GBP/USD stops further recovery ahead of NATO summit, UK construction PMI

GBP/USD fails to ignore the broad US dollar (USD) recovery while declining to 1.2940 during pre-London open on Tuesday. The pair’s pullback could also be attributed to the recent changes in the United Kingdom’s (UK) politics and cautious trading ahead of the United States (US) President Trump’s London visit for the North Atlantic Treaty Organization (NATO) summit.

With the new Survation polls indicating the ruling Conservatives having only a nine-point lead over the main opposition Labour Party, markets take every criticism to the UK PM seriously. The Tory leader has recently been fired off-late, either by the opposition or the media, which in turn might have lessened the scope of the Conservatives holding the British rule after December election. The latest one came after the UK PM Johnson visited the recent attack’s cite near London and the father of the deceased urged the PM not to politicize his son’s death. On the contrary, Labour party's heavy offers to the voters seem to play their roles.

Over the counter, the USD registered heavy losses on Monday as the US President Trump announced measures that show the world’s largest economy’s preference for trade protectionism. The US-China tussle over Hong Kong also weighs on the greenback. Recently, China announced sanctions over the US Non-Government Organization (NGO).

Moving on, the US President Donald Trump will travel to London on Tuesday for the NATO summit. Even if nothing major is expected to roll out from the meeting, the UK’s opposition parties will keep eyes on the meeting between the US and the UK leaders to strengthen their earlier claims that the UK PM has plans to sell National Healthcare System (NHS) to the US.

On the economic calendar, the final reading of November month UK Construction Purchasing Managers’ Index (PMI) will be watched for intermediate moves.

Technical Analysis

Bulls need to cross a six-week-old falling trend line, near 1.2975, to aim for 1.3000 and September month tops near 1.3015. The absence of which could keep prices vulnerable towards monthly support line around 1.2840.