- Brexit optimism, risk-on extends recent recovery.
- Services PMI and developments surrounding risk events could direct near-term moves.
The GBP/USD pair is on the bids near 1.3140 ahead of the London open on Wednesday. The quote recovered as news report signalling an end to Brexit deadlock and a likely trade deal between the US and China pleased buyers. Investors might now concentrate on the UK services PMI and the US ADP employment change, ISM non-manufacturing PMI data for fresh impulse.
Having observed multiple rejections to her Brexit deals and the parliament turning down their own proposals twice, the British PM Theresa May finally decided to join hands with the opposition Labour party to break the Brexit deadlock ahead of April 12 exit date. The development gave a sigh of relief to the Pound traders as it signalled faster progress of the departure process.
On the other hand, the Financial Times reported that the US and China are close to the much-awaited trade deal. The news report triggered risk-on sentiment, providing additional strength to the pair’s recovery as it reduces the US Dollar’s safe-haven demand.
10-year Treasury yields of the US government bonds recently grew 2.2 basis points to remain around 2.5%.
Next up on the traders’ radar will be the British Markit services purchasing manager index (PMI), followed by the US ADP employment change and ISM non-manufacturing PMI.
March month services PMI for the UK is likely to have softened to 50.9 from 51.3 whereas the US ISM non-manufacturing PMI for the same month could slip to 58.0 from 59.7. Further, ADP employment change from the US bears the expectations of 170K against 183K earlier.
It should also be noted that the US and Chinese lawmakers are discussing trade as a team led by China’s Vice Premier Liu He is on a two-day visit to the US whereas British lawmakers may table another Brexit proposal soon in the parliament.
GBP/USD Technical Analysis
An area surrounding 1.3150/55 seems immediate resistance, a break of which could propel the quote to 1.3200, 1.3270 and 1.3330 numbers to the north.
Meanwhile, 1.3100, comprising 50-day simple moving average (SMA) could restrict the pair’s immediate declines ahead of highlighting 1.3050 and 200-day SMA level of 1.2980.
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