- GBP/USD looks for direction after two days of declines, ahead of the key data/events.
- USD stays on the back foot after US President Trump’s impeachment.
- UK politics, Brexit and trade headlines will add burden on to the pair watchers.
GBP/USD remains under pressure, despite waiting for fresh clues, while trading around 1.3080 ahead of the London open on Thursday. The quote fails to cheer broad USD weakness as key data/events from the UK are lined up for publishing.
The US Dollar (USD) registered broad losses after the House of Representatives voted to impeach President Trump. The ball will reach the Senate sometime during early January for the opposition Democrats to make Donald Trump as the third in the history to get impeached. However, the White House has shown concerns that the Senate will exonerate the President. The same could be believed considering the Republicans’ majority in the Senate.
On the other hand, the European Union (EU) is on its rounds to criticize the UK PM Boris Johnson’s “do or die” pledge while the leader of the Scottish National Party (SNP), Ms. Sturgeon is also readying for a second referendum to leave the UK. Elsewhere, the opposition Labour Party leader Jeremy Corbyn is getting heavily criticized and might have to exit from the post after the party registered its most humiliating defeat since 1935.
Looking forward, Cable traders will first observe November month Retail Sales ahead of the monetary policy meeting of the Bank of England (BOE) and the British Queen’s speech setting out out the Conservative government’s agenda for the upcoming year. On the flip side, the US Philadelphia Fed Manufacturing Survey, Existing Home Sales and Weekly Jobless Claims will decorate the economic calendar.
While various positives are likely to roll out from the Queen’s speech, the BOE isn’t expected to announce any surprises. Further, the UK Retail Sales might portray a downbeat picture of the British economy. In this regard, Westpac says, “The Bank of England MPC reviews policy, with much interest in its commentary on Brexit, now that the general election has finally ensured that Brexit will proceed before 31 January 2020. A steady hand at 0.75% is assured, however. Markets are pricing a 65% chance of a rate cut by May 2020. Also in the UK, we will see November retail sales data, with sales volumes ex-fuel seen up 0.4% MoM, 2.0% YoY.”
Technical Analysis
Considering the pair’s sustained trading below the 10-week-old rising trend line, October month high near 1.3010 and 38.2% Fibonacci retracement of September-December upside, at 1.2915, are on sellers’ radars. Alternatively, pair’s rise beyond the support-turned-resistance, at 1.3125 now, will have to cross 23.6% Fibonacci retracement level of 1.3145 to meet Monday’s low around 1.3320.
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