- GBP/USD probes multi-week high of 1.3368 following the latest swing from 1.3332.
- UK Tories urge Treasury to not push for tax hikes in November budget.
- Fears of no deal Brexit renew after UK warned EU over state aid rules.
- British banks are closed today, Fed’s Clarida, Dallas Fed data will be watched for intermediate clues.
GBP/USD bulls struggle for a clear direction around 1.3350, after rising to the highest since December 2019, while heading into the London open on Monday. Although broad US dollar weakness can be attributed to the pair’s sustained run-up to 1.3368, Summer Bank Holiday in the UK joins downbeat catalysts concerning Brexit and fears of a tax hike to challenge the pair’s further upside.
No more Brexit fears?
Even if the UK Times mention British PM Boris Johnson’s no-deal Brexit threat to the European Union (EU), the GBP/USD bulls remain unaffected as the US dollar index (DXY) seesaw around multi-month lows after Friday’s heavy losses. In doing so, the Cable also ignores the weekend news suggesting the UK Treasury’s push for tax hikes concerning the November month’s budget irrespective of Tories’ warnings.
Other than the US dollar weakness, last week’s upbeat comments from the BOE Governor Andrew Bailey and today’s off at the British banks could also be spotted for the pair’s strength.
Elsewhere, the US-China tension continues but the coronavirus (COVID-19) woes are likely receding with the American health official signaling an early cure despite the Oxford University Professor’s criticism of a rush for the same. Further, China’s official PMIs flashed upbeat data while numbers from Japan came in mixed.
Amid all these catalysts, the S&P 500 Futures refresh record high above 3,500 while stocks in Asia-Pacific print gains led by Japan’s Nikkei 225.
Moving on, speech by Federal Reserve Governor Richard Clarida will precede Dallas Fed Manufacturing Business Index, prior -3, to entertain intraday traders. However, major attention will be given to how the American markets respond to the latest US dollar weakness amid oversold conditions.
Technical analysis
With the sustained trading beyond 21-day SMA, backed by the bullish MACD signal, GBP/USD prices can attack an ascending trend line from June 30, at 1.3383 now. Though, overbought RSI may question the bulls targeting December 2019 peak near 1.3515. Meanwhile, any downside below March month’s top around 1.3200 will fetch the quote to 1.3130 support confluence including 21-day SMA and the aforementioned trend line.
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