- No-deal Brexit fear keeps weighing on the GBP/USD pair.
- The UK-Iran drama may get bitter as Britain recently deployed few more ships to Bahrain.
GBP/USD recovers from April 2017 bottom as it trades near 1.2370 ahead of the London open on Monday.
The quote has been on a southward trajectory as odds of a no-deal Brexit boosted after the hard Brexiteer Boris Johnson recently became the UK’s Prime Minister. Mr. Johnson reshuffled the cabinet with the key characteristic of the newly arrived lawmakers being their preference to leave the bloc by October 31, with or without a deal. Some of his policymakers, like Finance Minister Sajid Javid, have started announcing hefty packages to safeguard against the no-deal Brexit.
The European Union (EU), however, has less preference for the hard Brexit but shown no readiness to re-open the previous deal, which in turn increases the chances of a disorderly exit.
The UK’s Confederation of Business Industries (CBI) has recently published a piece showing fewer prospects of a soft Brexit unless the EU runs faster for it, which seems absent off-late.
On the other hand, the US trade delegation will negotiate the much-awaited deal after a three-month halt in Beijing. While the 2-day-long talks, to start from Tuesday, are less likely to deliver any breakthrough, traders will seek clues as to how much both the nations have changed so far as their attitudes in trade conditions are concerned.
Also important is the monetary policy meeting by the US Federal Open Market Committee (FOMC). The US central bank is widely expected to announce a 0.25% rate cut, the first in more than a decade.
Further to note is Britain’s additional troop deployment in Bahrain to protect ships in the Gulf of Hormuz. The same has been highly criticized by Iran during the latest meeting in Vienna.
It should also be noted that the UK PM Johnson will visit Scotland, to get the support for his Brexit policies, during today.
In addition to trade/political headlines, the UK’s Consumer Credit, Mortgage Approvals and M4 Money Supply could entertain the traders ahead of offering the US Dallas Fed Manufacturing Index details.
Forecasts suggest an improvement in Britain’s June month Consumer Credit and Mortgage Approvals to £0.967B and 65.990K from £0.822B and 65.409K respectively. Though, June month money supply is likely being lesser, to -0.5% versus -0.1%. Furthermore, the US Dallas Fed Manufacturing Index (July) could improve to -5.1 from -12.1.
Technical Analysis
Sustained trading below 1.2360 might not refrain from dragging the quote to 1.2310 and 1.2200 whereas 1.2375 and July 23 low around 1.2420 may limit immediate upside.
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