GBP/USD: Brexit woes recall bears around 1.3600, PMIs, Conservatives summit eyed
|- GBP/USD snaps three-day uptrend, sellers attack intraday low of late.
- UK’s Frost again warns EU over NI protocol, brands US President Biden as no more than an "interested observer".
- UK PM Johnson eyes post-covid economy guide during first annual Conservatives meet since 2019.
- Fears over China financial markets, anxieity over US stimulus, debt ceiling favor USD strength ahead of the key PMIs.
GBP/USD remains on the back foot around 1.3590, down 0.13% intraday heading into Tuesday’s London open. In doing so, the cable pair registers the first daily loss in four as Brexit woes join fears emanating from China and the US.
UK Brexit Minister David Frost recently reiterated his warning to the European Union (EU), over repealing the Northern Ireland (NI) protocol, considering the harsh rules for goods travel between the UK and the NI border. The diplomat also said, when asked what role Mr. Biden could play in talks, "I think this is a negotiation between us and the European Union. Outsiders are kind of interested observers, but not more than that,” per Independent.
Elsewhere, the UK meat producers blame Prime Minister (PM) Boris Johnson for reasons for labor shortage in the sector, per The Guardian. The Associated Press (AP) mentioned that the UK PM Johnson is ready to take “bold decisions” to rebuild the economy after the coronavirus pandemic as his Conservative Party meets Sunday for its first annual conference since 2019.
On the other hand, chatters surrounding Fantasia Holdings Group and Sinic, real-estate companies from China, join uncertainty over US infrastructure spending and debt limit extension to weigh on the market sentiment, underpinning the US dollar’s safe-haven demand.
Against this backdrop, the US 10-year Treasury yields extend the previous day’s recovery moves to 1.50%, up 1.7 basis points (bps) while stock futures remain sluggish while the US Dollar Index (DXY) rises near 0.17% on a day as the bulls poke the 94.00 threshold by the press time.
Although the risk-off mood and the Brexit fears weigh on the GBP/USD prices, the final reading of September month’s Markit Services PMI for the UK and the US ISM Services PMI for the stated month, expected 60 versus 61.7, will be important to watch for additional details.
Read: US September ISM Services PMI Preview: Eyes on inflation and employment details
Technical analysis
Unless crossing a downward sloping trend line from September 14 and the 11-week-old support-turned-resistance, respectively around 1.3625 and 1.3645, GBP/USD remains on the bears’ radar.
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