- Receding political uncertainty and the Fed’s dovish turn helps the Cable.
- UK Retail sales and BOE are in the spotlight for fresh impulse.
In addition to further clarity over the UK PM’s race after three rounds of Tory voting, dovish FOMC offered additional fuel to GBP/USD recovery that’s confronting 21-DMA by being around 1.2655 on Thursday morning.
The Conservatives hold their favorite status reserved for Boris Johnson during the third round of voting, by giving him 146 favors, while leaving the race was Rory Stewart.
With this, there prevail only 4 candidates to the race for the UK Prime Minister leaving gates open for the final round of voting later-today before calling in the postal vote from the 160,000 Tory party members.
Markets recently welcomed shift in Boris’s support for hard Brexit while giving less importance to the headline UK consumer price index (CPI) data meeting 2.0% forecast on YoY basis.
Federal Reserve’s shift to join the rest of global central bank doves also helped the Cable to extend the latest recovery. However, Chairman Jerome Powell’s “not so dovish” press conference questioned the bulls.
Looking forward, UK retail sales and monetary policy meeting by the Bank of England (BOE) will be in the spotlight. The retail sales might soften to 2.7% from 5.2% during May on a yearly format and could drop to -0.5% versus 0.0% on a MoM basis.
The BOE isn’t expected to alter its monetary policy while no change is likely happening in the MPC vote. Though, investors will seek clues of Brexit uncertainty and how might it affect the central bank’s future moves inside the statement.
Technical Analysis
A 21-day simple moving average (SMA) at 1.2660 acts as immediate upside barrier, a break of which can trigger the pair’s rise to current month high near 1.2765 and then towards 50-day SMA level of 1.2828.
On the downside, 1.2610, 1.2580 and latest bottom near 1.2505 seem key supports to watch.
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