- GBP/USD recovers from the early-day losses, piled mainly due to Brexit pessimism.
- Employment data could offer intermediate directions while political headlines will keep the driver’s seat.
GBP/USD revisits 1.3300 mark while heading into the London open on Tuesday. That said, the pair earlier dropped nearly 70 pips on worries concerning the hard Brexit.
The quote recently dropped on concerns that the United Kingdom’s (UK) Prime Minister (PM) Boris Johnson is ready to take benefit of his recently gained Parliamentary majority by putting forward a bill that blocks the extension of the transition period deadline beyond 2020. The bill, if passed, will make it harder for the European Union (EU) in the short-term to agree with the British demands and raises the odds for a no-deal Brexit, as per the ITV reporter Robert Petson.
On Monday, downbeat numbers of the preliminary Purchasing Managers Index (PMIs) jostled with the Bank of England (BOE) Governor Mark Carney’s comments that the economy will be able to endure Brexit.
Traders will now keep eyes on November month Claimant Count Change and October month Unemployment Rate while Average Earnings for 3 Mo/Yr) will be additionally observed. About the data, TD Securities said, “While survey data indicates that the labor market data is likely to turn for a worse, it will probably still be at least another couple of months before we see that come through. For October, we look for the unemployment rate to tick back up to 3.9% (market 3.9%), as it’s bounced around between 3.8-3.9% for the last 9 months now. We look for wage growth to decelerate a bit on base effects after a very strong Oct 2018 m/m print, with both total and ex-bonus pay slipping to 3.4% y/y (market also 3.4% for both).”
Additionally, developments surrounding the upcoming bill, likely on Friday, could keep the cable traders busy.
Technical Analysis
10-day Exponential Moving Average (EMA) around 1.3200 and May month high close to 1.3180 can be considered as immediate supports while 1.3515 becomes the tough nut for buyers to crack.
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