- Brexit doldrums keep exerting downside pressure on the GBP/USD pair.
- Boris Johnson will travel Northern Ireland on Wednesday.
- Absence of fresh catalysts and markets wait for FOMC triggers the quote’s latest pullback.
The GBP/USD pair pulls back from its multi-month low to 1.2150 ahead of the London open on Wednesday.
The quote remains sidelined off-late amid few catalysts from the UK, except for the PM Johnson’s repeated push to renegotiate the Brexit deal to the EU. It should also be noted that tension ahead of his Northern Ireland visit and the much-awaited monetary policy meeting by the US Federal Reserve play their roles in limiting recent moves.
Not only British Prime Minister (PM) Boris Johnson’s comments that the EU must scrap the backstop to avoid a no-deal Brexit but statements from Irish taoiseach, Leo Varadkar, also piled on the expectations of a hard UK exit from the bloc. Additionally, the UK Brexit Secretary, Stephen Barclay, was also brightening the chances of a no-deal Brexit as spoke to the European Union (EU) Chief Brexit Negotiator Michel Barnier
The UK PM will travel to Northern Ireland today and meet few politicians there as his first call with Mr. Varadkar didn’t go well due to the Irish preference for the backstop.
While Brexit drama will be here to stay for a bit longer, market players will be keen to observe how the US Federal Open Market Committee (FOMC) tackles the fears of slowdown at home. The Fed is widely anticipated to announce a 25 basis points rate cut with a start to balance-sheet normalization. However, upbeat remarks by the Fed Chairman Jerome Powell can trigger the US Dollar (USD) strength.
It should also be noted that ADP Employment Change and Chicago PMI from the US can entertain traders ahead of the key FOMC event. While the early signal to Friday’s NFP, the ADP number, is likely to increase from 102K to 150K, manufacturing activity index can also cross the contraction region with 50.5 level versus 49.7 earlier.
Additionally, final comments from the US-China trade talks in Shanghai increase the burden on market watchers.
Technical Analysis
Unless clearing 1.2438/42 area comprising 20-day moving average and January low, the pair isn’t expected to lure bulls while sellers can keep 1.2000 on the target-list with recent low surrounding 1.2100 being an intermediate halt.
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