- Increasing favor for soft Brexit pleases GBP buyers.
- UK CPI, another round of Tory-voting and FOMC will provide a fresh impulse for trading.
With the growing expectations of soft Brexit, buyers carry their favor for the British Pound (GBP) as the GBP/USD pair trades around 1.2565 during the initial Asian session on Wednesday.
Even if frontrunner to the UK PM’s race Boris Johnson gained more than previous 114 to 126 votes during the second round of Tory contest, his failure to justify strong support for October 31 Brexit deadline and tax reliefs gives rise to expectations that the Brexit hardliner might end up turning soft on the key British issue.
It should also be noted that there prevails on 5 candidates for the PM’s race as of now after the latest voting eliminated Dominic Raab, a former Brexit secretary.
Adding to the relief could be statements from political fraternity indicating that there won’t be a general election until Brexit issue is solved.
Investors seem to show less attention to the news that the news report suggesting that the opposition Labour party leader Jeremy Corbyn is planning to push for the change in Brexit policy and a second referendum during later today.
Moving on, British consumer price index (CPI) and another round of voting to funnel down the list of UK PM candidates will be on the spotlight ahead of the FOMC.
The UK CPI is expected to soften to 2.0% from 2.1% (YoY) during May whereas the FOMC isn’t expected to alter its monetary policy but press conference from the Chairman Jerome Powell and quarterly economic forecasts will be the key to observe.
Technical Analysis
A sustained run up beyond 1.2580 might help extend the present upward trajectory towards 1.2650 and then to 21-day simple moving average (SMA) figure of 1.2655.
On the downside, on the downside break of the latest low, around 1.2500, bears can target December 2018 bottom near 1.2477 and the current year low surrounding 1.2438.
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