GBP/USD: UK’s political plays can act as the key catalysts amid latest upswing

Market respects anti-USD momentum amid lack of fresh catalysts at home.
Boris Johnson’s clarification of the home raw will be the key to watch.
Second-tier US data may offer intermediate moves.

Anil Panchal FXStreet

Even if the US Dollar (USD) weakness has helped the GBP/USD pair to remain strong around 12-day high, the pair lacks fresh catalysts in order to extend its latest upswing as it seesaws near 1.2750 ahead of the UK open on Monday.

Doubts over the US-China trade deal, a latest dovish appearance by the US Federal Reserve and geopolitical tension between the US and Iran are some of the key reasons that could have pushed the anti-USD mode farther.

At home, the latest pressure on the UK Prime Minister (PM) candidate Boris Johnson should have weighed down the British Pound (GBP) over political uncertainty.

Leading British lawmakers, including another candidate for the UK PM’s race Jeremy Hunt, have stepped forward in demanding clarification of the likely tussle between Boris and his girlfriend that led police towards Mr. Johnson’s home during the after hours of a party.

While ex-USD moves have dominated market sentiment off-late, how Mr. Johnson justifies the latest incident seems the key as he still needs to please 160K Tory voters to become the UK PM.

On the economic data front, the US Chicago Fed National Activity Index and Dallas Fed Manufacturing Business Index, respectively for May and June months, can gain short-term traders’ attention. The activity gauge from the Chicago Fed might flash -0.37 against -0.45 previous whereas the Dallas Fed index could recover to +4.8 from -5.3 earlier.

Technical Analysis

Unless clearly breaking the current month high surrounding 1.2763/65, the pair is less likely to avoid meeting 1.2700, 1.2660 and 1.2610 nearby supports. On the contrary, quote’s ability to cross 1.2765 enables it to aim for 50-day simple moving average (SMA) level near 1.2815 and then April month low near 1.2865.

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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