GBP/USD bounces-off 1.3060, but still below 1.3100
- Will the recovery sustain?
- Doubts over the UK PM May’s leadership grow
- Derives support from Treasury yields sell-off.
Having slumped to fresh six-day lows at 1.3062 last hour. the GBP/USD pair embarked upon a minor-recovery attempt. However, sellers continue to lurk near 1.3080 region, as the UK’s political uncertainty continue to undermine the sentiment behind the GBP.
GBP/USD: 1.3000 on sight?
The spot is down nearly 1% or more than a big figure from daily tops reached just shy of 1.32 handle, as markets remain wary over mounting political uncertainty surrounding the UK PM May’s leadership, in the wake of the weekend news piece published by The Times that reported on 40 members of the PM's Conservative party signing a letter of no confidence in Theresa May's leadership.
Despite the massive sell-off, the bulls were offered some respite from the tumbling Treasury yields across the curve on the back of the US tax reform uncertainty, with Politico now reporting that the GOP leaders are bullish that the tax bill will pass the House this week.
More so, upbeat UK industrial output and good trade data combined with expectations of some hawkish speech from the BOE Governor Carney due later this week, also helps keep the downside cushioned in the major.
Focus now shifts towards the UK macro releases, including the key inflation and jobs report amid a data-empty US docket today.
GBP/USD Technical View
Karen Jones, Analyst at Commerzbank, noted: “GBP/USD was sidelined for most of the week and remains on the defensive while capped by the 55-day moving average at 1.3220 and attention is focused on the 1.3069/49 support line and 2016-2017 uptrend. It represents the breakdown point to 1.2830/1.2774, the 38.2% retracement and August low, and the 1.2575 50% retracement.”