- Positive developments at cross-party Brexit talks favor buyers ahead of FOMC.
- Monthly PMI add into the economic data lined for publishing.
GBP/USD steps forward to May start on a positive side as it traders near 1.3040 during early Wednesday. The Cable surged Tuesday after optimism surrounding the cross-party Brexit talks grew and also because the US Dollar (USD) dropped against the majority of its counterparts on disappointing Chicago PMI.
Global traders gave higher importance to 27-month low Chicago purchasing manager index (PMI) figures on yesterday than upbeat CB consumer confidence and pending home sales from the US. It could also be said that investors preferred avoiding the USD ahead of today’s FOMC.
On the other, comments from the UK PM May’s spokesman and EU officials favoring fast progress and expectations of positive results from the cross-party Brexit talks have helped the British Pound (GBP) to register noticeable upside.
Recently, the opposition Labour party said they will only support the second referendum if they fail to get a good Brexit deal and/or disappoint from the EU elections. As a result, a ray of hope emerged that Jeremy Corbyn and company are finally in the mood to support PM May after a month of discussion on Brexit.
Looking forward, April month Markit manufacturing PMI from the UK, followed by the US ISM manufacturing PMI and FOMC, could become crucial for the markets to watch.
While the UK manufacturing gauge is expected to soften to 53.0 from 55.1 prior, its counterpart from the US may also follow the suit with 55.0 forecast and 55.3 previous. The US Federal Open Market Committee (FOMC) is more likely to reiterate its bearish bias but recent improvement in headline data might help the US central bank to remain positive while predicting future economics. Also, the press conference from the Fed Chair Jerome Powell will provide additional volatility into the USD connected pairs.
Technical Analysis
Sustained break of seven-week-old descending trend-line favors the quote’s further upside towards 50-day simple moving average (SMA) level of 1.3105 with 1.3130 and 1.3200 being follow-on levels to observe.
Should the pair drops beneath 1.3000 resistance-turned-support, 100-day and 200-day SMA confluence near 1.2970/60 seems strong support as a break of which can fetch prices to April month lows near 1.2870.
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