- The UK Conservative Party chose Boris Johnson to be the next British PM.
- The UK Justice Minister Gauke resigns immediately after the announcement.
- No-deal Brexit fears/USD strength prompts some fresh selling at higher levels.
The GBP/USD pair faded a mid-European session knee-jerk bullish spike and quickly retreated around 50-pips over the past couple of hours.
Having dropped to an intraday low level of 1.2418, the pair witnessed a dramatic turnaround and rallied to fresh session tops, around the 1.2480 region following the announcement that the UK Conservative Party chose Boris Johnson to be the next British PM.
The uptick, however, fizzled out ahead of the key 1.2500 psychological mark and met with some aggressive supply near 100-hour SMA in reaction to the UK Justice Minister David Gauke’s resignation, immediately after the Johnson announcement.
This coupled with persistent fears of a no-deal Brexit further held investors from placing any aggressive bullish bets, with a strong follow-through US Dollar buying interest prompting some selling at higher levels and collaborating to the pair’s sharp slide back below mid-1.2400s.
With the incoming UK political headlines turning out to be one of the key factors infusing some volatility around the major, Tuesday second-tier US economic releases – Existing Home Sales data and Richmond Manufacturing Index, seems unlikely to provide any meaningful impetus.
Technical levels to watch
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