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GBP/USD has been holding up as UK PM Johnson is trying to address concerns about Brexit legislation. The Federal Reserve’s decision and retail sales are set to rock markets on Wednesday, Yohay Elam, an analyst at FXStreet, informs.

Key quotes

“A Brexit compromise is always good news for the pound – which has been extending its recovery. PM Boris Johnson has been seeking to soothe concerns about the controversial Internal Markets bill that passed the first hurdle in parliament. Several members of the PM’s ruling Conservative Party have either abstained or voted down the legislation – and others were expected to follow. If the final wording refrains from breaking international law, the pound could extend its gains.”

“GBP/USD could continue higher if US Retail Sales fail to meet high expectations. Despite the expiry of several government programs, economists expect another increase in expenditure in August. The high bar opens the door to disappointment and could send the greenback down.”

“While upgrades are on the cards, the Fed may still project only a gradual return to pre-pandemic levels. However, if Federal Reserve Chairman Jerome Powell refrains from signaling new stimulus, stocks may turn down.”

“The mood in equity markets has already cooled – especially as tech stocks are off their highs. A report that the Federal Trade Commission opened an antitrust probe into Facebook’s dealings is also weighing on the sector. In case the Fed fails to inspire, stocks may drop and the safe-haven dollar may rise.”