- Boris Johnson withdrew from the PM race, putting Rishi Sunak ahead.
- Britain’s finance minister, Jeremy Hunt, formerly endorsed Rishi Sunak.
- Investors will pay attention to the UK PMI data coming out later today.
Today’s GBP/USD outlook is bullish as calm returns to UK markets. In early Monday trading, the pound gained more than half a cent against the dollar.
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After Boris Johnson withdrew from the race on Sunday, Rishi Sunak appeared to be the front-runner to become the next prime minister of Britain. Johnson claimed that despite having enough support to advance to the final round, he realized the country and the Conservative Party needed unity.
Sunak, a 42-year-old former finance minister and Johnson’s arch-rival, is now appointed prime minister, maybe as soon as Monday. One candidate would be declared prime minister on Monday if they received the support of 100 Conservative lawmakers, per the regulations.
If two candidates cleared the bar, they would advance to a vote for the party membership. The winner would have been declared on Friday, just days before Jeremy Hunt, the country’s new finance minister, revealed the health of the nation’s finances in a budget plan scheduled for release on October 31.
That had sparked worries that Johnson would retake Downing Street with the support of party members rather than a majority of parliamentarians, further dividing the party. Late on Sunday, Hunt formally endorsed Sunak.
GBP/USD key events today
Investors expect the release of UK PMI data later today. The PMI data will show the activity level of purchasing managers in the manufacturing and services sectors. Both sectors are expected to have readings below 50, showing contraction.
GBP/USD technical outlook: Pound oscillates between 1.1150 and 1.1401
The 4-hour chart shows the price trading above the 30-SMA and the RSI above 50. The indicators show that bulls are currently controlling the markets but face strong resistance from the 1.1401 key level. The price has been trading with support at 1.1150 and resistance at 1.1401.
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If bulls can gather enough momentum to push the price beyond the range resistance, we could see the uptrend continue. However, bears might also return to this resistance level as they have done before. This would mean attempting a break below range support.
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