- GBP/USD fails to carry the previous pullback as traders remain sidelined ahead of key events.
- Headlines from Germany helped trigger an earlier rise.
Despite German Chancellor’s comments renewing hopes of a soft Brexit, GBP/USD remains on a back foot as traders await details of the UK PM’s EU visit, followed by the FOMC minutes, for fresh impulse. With this, the Cable takes the rounds to 1.2160 ahead of Wednesday’s London open.
In her latest media appearance, German Chancellor Angela Merkel refrained to turn down the UK PM’s objection on the Irish border while considering it as the political declaration on future ties, not of the Withdrawal Agreement. Traders took it as a positive sign from the EU’s largest economy ahead of British Prime Minister (PM) Boris Johnson’s visit.
However, Reuters reported that all 27 EU states, staying together after Brexit, are jointly supporting the region’s stand on the Irish backstop. As per the letter quoted in the news report, “The EU regrets that the new United Kingdom government wants to replace a legally operative solution with a commitment to try to find a solution – yet to be found – by the end of the transition period.”
This turns down the PM Johnson’s upbeat expectations from the two-day long EU visit starting from today. Though, he has a positive point at home wherein the latest survey from YouGov signal public support for Boris Johnson while turning down Jeremy Corbyn as the PM and a delay in the Brexit.
Other than headlines from Germany and France, Federal Open Market Committee (FOMC) minutes will also be the key for the pair traders as traders will keep a tab on hints for the latest rate cut. On the economic calendar, July month Existing Home Sales from the US, expected 5.39M versus 5.27M, will entertain traders.
While no breakthrough is expected from the UK PM’s EU visit, any surprise can propel the Cable’s latest upswing. On the other hand, hawkish FOMC minutes will pave the way for an upbeat tone of Fed officials at the Friday’s Jackson Hole Symposium speech, which in turn will keep supporting the US Dollar (USD) strength.
Not only 1.2210 but July-end high of 1.2250 will also question buyers targeting a run beyond 1.2300 mark. As a result, 1.2100 and the monthly low around 1.2015 will remain on the sellers’ radar.