- GBP/USD holds onto recovery gains from early-Asia low surrounding 1.2705.
- UK Business Secretary announced further easing of lockdown restrictions, PM Boris Johnson will offer additional guidelines.
- Britain catches the fire between the US and China’s tussle, mainly due to Huawei.
- A light calendar could restrict market moves during the pre-Fed trading lull.
GBP/USD seesaws around 1.2740, intraday high of 1.2747, while heading into the London open on Wednesday. The pair seems to benefit from the US dollar weakness ahead of the Federal Reserve monetary policy decision. In doing so, the Cable might have also cheered the recent easing of lockdown restrictions in the UK amid a light calendar.
British Business Secretary Alok Sharma took over the daily coronavirus (COVID-19) briefings on Tuesday. The Tory diplomat confirmed that shops in the UK will reopen on June 15. Additionally, the Sky News mentioned that the policymaker at legislation to make it harder for Chinese firms to invest in UK infrastructure. The move could be in response to China’s agitation in respecting the UK government’s shift in practices against Huawei. While backing its ally against Beijing, US Secretary of State Mike Pompeo also criticized China’s Communist Party’s role in threats to punish British banks and step back from promised investments.
UK PM Boris Johnson is expected to announce some more guidelines for the easing of the pandemic-led halt in the economic activities. In addition to the updates on how the economy will reopen, markets will observe the Tory leaders’ say on China and Brexit.
Recently, the ruling party reiterated its tough stand against changing the Brexit deadline while pushed for a softer stand by the opposition. The UK Express quotes Penny Mordaunt while saying, that there would be “no point” in striking a last-minute agreement because it would leave businesses scrambling to prepare for the changes.
Amid all these plays, the market’s risk-tone struggles for a firm direction with the US 10-year Treasury yields taking rounds to 0.83%. It’s worth mentioning that stocks in Asia also stay directionless ahead of the key Federal Open Market Committee (FOMC).
Although most forecasts suggest no change in the Fed rate, investors will be keenly watching the quarterly dot-plot projections as well as economic forecasts for fresh impulse. Also increasing the importance of the event will be Chairman Jerome Powell’s press conference following the rate decision and release of the statement.
Technical analysis
Although overbought RSI conditions on the daily chart signal the pair’s 200-day EMA re-test, a daily closing beyond Tuesday’s high of 1.2756 could escalate the north-run towards 1.2800 round-figures.
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