GBP/USD retraces from 3-week high while heading into G7, Jackson Hole

• GBP/USD trims latest gains as Tories warn PM Johnson.
• The increasing scope of soft Brexit triggered the pair’s earlier surge.
• G7, global central bankers’ appearance at Jackson Hole will be followed for fresh impulse.

With looming uncertainties surrounding Brexit shrugging the previous day’s positive catalysts off, the GBP/USD pulls back to 1.2230 ahead of the UK’s Friday session opening.

The UK Prime Minister (PM) Boris Johnson managed to get good news, at least for now, from German and French leaders during his first visit to the EU as the British leader. Both the European powerhouses agreed to renegotiate the Irish backstop issue, which has been holding the Brexit backward since late, if PM Johnson comes up with a proposal not majorly different from the previous one.

However, the departure problem remains intact as he was recently warned by senior Tory Brexiteers that stripping out the Northern Ireland backstop is not enough to win their support, as per the UK Telegraph. The news report further mentions that senior Tory members, including David Davis, demand no liability towards paying the £39 billion Brexit bill and set a time limit on the jurisdiction of the European Court of Justice to get their support at the British Parliament.

With this, the Cable trims some of its latest gains from the three-week high, previously earned through expectations of a soft Brexit.

Risk sentiment recovers off-late ahead of the key events with the US 10-year treasury yields gaining more than two basis points to 1.637% by the press time.

Investors now concentrate majorly on the upcoming G7 meeting in France as Mr. Johnson will meet the US President for the first time after becoming the UK PM. Traders will also observe how the European leaders treat Mr. Johnson after the latest warm welcome. Also up in the radar will be the key Jackson Hole speeches by various Fed speakers who will signal future policy moves.

Technical Analysis

Unless breaking 1.2271/78 resistance-confluence, comprising 200-bar moving average on the four-hour  chart  (4H 200MA) and eight-week-old falling trend-line, prices are likely to decline towards nine-day long descending support-line at 1.2080. Alternatively, pair’s sustained break of 1.2271/78 enables buyers to confront July 17 bottom surrounding 1.2380.