- GBP/USD reacts to early-day headlines increasing the odds of a no-deal Brexit.
- Media leaks suggest the UK PM Johnson’s final Brexit proposal to the EU seems to have a little acceptance.
- UK Construction PMI, US ADP Employment Change and Fedspeak decorate the economic calendar.
The US Dollar’s (USD) across the board weakness couldn’t push the Cable sellers far as early Wednesday headlines from the UK exert downside pressure on the GBP/USD pair, currently trading near 1.2290 while heading into the London open.
Not only the United Kingdom’s (UK) Prime Minister (PM) Boris Johnson’s sturdy attitude towards October 31 be the Brexit date but anticipation of another attempt to prorogue the British Parliament, as conveyed by the Times, and likely delay in budget announcements, said by the Financial Times, also recently weighed on the Cable.
Adding to the downside pressure could be the negative reaction of the EU and Irish diplomats to the UK Telegraph’s news report conveying the leaks of likely Brexit proposal from the Tory leader.
While the UK Construction Purchasing Managers’ Index (PMI), no expected change in 45 prior, becomes the only British data to decorate the economic calendar, investors will be closely observing details of the UK PM Johnson’s Brexit proposal, which The Guardian mentioned to be the final one. Also important will be the closing remarks of the Tory leader at the Annual Conservatives’ Conference as extracts from the prepared speech increases the odds of a no-deal Brexit.
On the other hand, renewed fears of the economic slowdown will focus on the Federal Reserve Bank of New York President John Williams’ speech while also highlighting the September month ADP Employment Change, expected 140K versus 195K prior.
Although initial hints of the British leader’s proposal of security checks at the Ireland border and a limited time backstop have been exerting downside pressure on the Cable, Democratic Unionist Party’s (DUP) support to the Tory leader in his latest Brexit fight could add strength to the upside momentum in a case of positive surprises.
Technical Analysis
While 21 and 50-day exponential moving average (EMA) around 1.2340/50 can keep pair’s short-term upside limited, September 17 low near 1.2390 and 1.2500 round-figure could please buyers afterward. On the contrary, 1.2210/2200 area including Tuesday’s low and August 06 high seems to be the tough support, a break of which will divert bears to 1.2100 rest-point.
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