GBP/USD: UK politics on the spotlight amid lack of major data, US holiday

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  • British PM hopefuls keep trying to gain Tory votes.
  • US markets are off due to Independence Day holiday, no key data from the UK.
  • Brexit pessimism, sluggish economics and aftershocks of the BOE Governor’s speech recently dragged the GBP/USD pair.

With the US holidays limiting market moves, the GBP/USD pair seesaws around 1.2580 while heading into the London open on Thursday.

Be it Manufacturing, Construction or Services, headline activity gauges from the UK have been disappointing off-late. The same support the Bank of England’s (BOE) Governor Mark Carney’s latest dovish statements.

At the political front, the UK Prime Minister candidates, namely Boris Johnson and Jeremy Hunt, continues to appear on various hustings and claim to be superior over the other.

Recently, both the candidates are trying to create an image that can offer fewer harms during the no-deal Brexit. However, the frontrunner Boris Johnson remains fierce and promises to cut short the government departs to save the expenses if he becomes the PM.

On the other hand, the US Dollar (USD) remains largely on the back foot against the majority of its counterparts as recently downbeat statistics favor the greenback bears expecting 50 basis points (bps) cut into the US Federal Reserve’s benchmark interest rate.

Adding to the greenback weakness is the US-led trade protectionism. Even after promising a truce with China, there hasn’t been any progress off-late whereas Bloomberg’s report of the US criticism to Huawei’s plea against the Trump administration’s ban may renew tension when the global leaders discuss trade which Reuters report to take place during next week.

Technical Analysis

The quote needs to cross 1.2660/65 area in order to aim for 50-day exponential moving average (50-day EMA) level of 1.2748, until then chances of the pair’s pullback to 1.2560 and June month bottom surrounding 1.2506 can’t be denied.

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