- Receding odds of no-deal Brexit help GBP/USD to carry its overnight recovery forward.
- UK lawmakers will vote to stop Brexit negotiations with the EU, which in turn can trigger another voting round for snap election.
- UK Services PMI and Fed speak to add to the list of the catalysts.
Having witnessed the UK parliament’s support to avoid a no-deal Brexit, GBP/USD takes the bids to 1.2110 ahead of Wednesday’s London open.
Earlier during the Asian session, British lawmakers voted in favor of the motion that will push the UK PM Boris Johnson to seek the Brexit deadline extension from October 31 to January-end while also leaving the window open for further extension unless getting a deal with the bloc. However, final voting on the motion is left to be performed during the day which in turn will enable Brexit-haters to take control of the negotiations off the government.
Among the total 328 supporters of the motion, 21 Tory Rebels including ex-Chancellor Philip Hammond have already lost their whip. Further, the PM Johnson has announced that he would call for a motion to support an early election in mid-October if the parliament takes over the Brexit power.
Other than the political plays, monthly Services purchasing managers’ index (PMI) numbers for August will also be the key to direct near-term Cable moves. The headline activity gauge is expected to soften to 51.0 from 51.4.
On the other hand, the US-China trade war headlines and comments from various Fed policymakers, including Federal Reserve Bank of St. Louis President James Bullard and Federal Reserve Bank of Chicago President Charles Evans, will be crucial to watch.
Technical Analysis
21-day simple moving average (DMA) level of 1.2143 and August 06 high of 1.2210 acts as immediate resistances for the pair to clear while August top surrounding 1.2310 limits the following upside. Alternatively, Refinitiv Data highlights the importance of 1.2000 mark as the key support by saying, “Barring an October 2016 flash crash when sterling briefly reached $1.15, sterling has not regularly traded below $1.20 since 1985.”
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