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  • GBP/USD on the back foot as Brexit worries gain more attention after the initial response to the US-China trade war.
  • The Downing Street sought legal advice about the possibility of shutting down the parliament.
  • UK PM Johnson says Britain can easily cope with no-deal Brexit and could keep much of the   £39bn settlement amount.

Although initial response to the US-China trade-war propelled GBP/USD at the day’s start, buyers seem to step back as the quote retraces to 1.2268 during the Asian session on Monday.

Having announced fresh tariffs on each others’ goods, the US and China renewed fears of global economic slowdown due to the trade war between the world’s largest economies. As a result, the US Dollar (USD) slumped across the board on Friday.

It should also be noted that the dovish comments from the Bank of England (BOE) and the Fed’s chiefs, at the Jackson Hole Symposium on Friday, seem to have offered direction to the pair ahead of the trade headlines that crossed wires during later part of that day.

As per the latest headlines from the Guardian, the UK Prime Minister (PM) Boris Johnson’s office has sought legal advice from the attorney-general Geoffrey Cox about the possibility of shutting down parliament from September. It was also conveyed in the news that the UK PM remains optimistic of the nation’s ability to cope with no-deal Brexit while also turning down the £39 billion divorce payment to the EU in a case of the harsh departure.

Traders now seek fresh clues on trade/Brexit and hence might have prioritized Brexit over the trade-war ahead of the UK parliament’s open after a long break and also amid speculations of a no-deal exit from the EU. Further, the US Durable Goods Orders and the Chicago Fed National Activity Index will decorate the economic calendar.

Technical Analysis

While a sustained rise beyond 1.2300 becomes necessary for buyers to target July 17 low of 1.2382, August 06 high near 1.2210 will act as immediate support.