GBP/USD: The Times' front page to weigh on GBP/USD?
|- GBP was the top performer last week.
- Will The Times report weigh on the Sterling in Asia?
- "A recovery up to 1.3300 possible," - Valera Bednarik, chief analyst at FXStreet.
GBP/USD rose nearly 1% last week and was the top performer followed by the Loonie. However, weekend reports in the Times newspaper may put a dampener on the pound in the opening shift on Monday. The Times reported that as many as forty Conservative members of parliament will sign a letter of no confidence in Theresa May leadership. Of no surprise, both Boris Johnson and Michael Gove have put ink to paper on the dotted line. However, as Bloomberg reported, it is not enough to trigger any action.
"May’s opponents are now eight lawmakers short of what’s needed for a leadership challenge, the newspaper said, citing people with knowledge of the matter it didn’t identify, " - Bloomberg.
"The government’s current issues merely reflect “the nature of politics,” Brexit Secretary David Davis said Sunday in a Sky News interview.
“The prime minister will be here right through Brexit and to my retirement” as the negotiator for exiting the EU at the end of the process, he said. “She’ll be my boss for that, I’m quite certain,” - Bloomberg citing the Times.
UK rates supporting Sterling
The recent run of UK data could well overshadow 'The Times' report, while just on Friday, we saw the UK 's Sept industrial/manufacturing output data beat expectations along with a smaller Goods trade deficit than forecasted. UK government bond yields rose again on Friday after some strong data and upgraded GDP forecasts, with the 10yr up from 1.27% to 1.35%. All in all, the implied yield of the December 2018 short-sterling futures contract edged about five basis points higher having previously fallen 15 bp after the BOE hiked rates on November 2, noted analysts at Brown Brothers Harriman. "However, sterling remains well within its $1.30-$1.3340 trading range. The daily technical readings are mixed, which we suppose lends itself to continued near-term range trading," explained the same analysts. On a bearish gap opening, sterling 'May' look cheap.
GBP/USD Forecast: Sterling heavy in data-intensive week
GBP/USD levels
Valeria Bednarik, chief analyst at FXstreet explained that the pair recovered up to the 61.8% retracement of the post-BOE's announcement decline, but the daily chart maintains a neutral stance, as the pair settled below the mentioned Fibonacci resistance and a few pips above an anyway flat 20 SMA:
"In the same chart, technical indicators are stuck within neutral territory, with no momentum upward. Shorter term, and according to the 4 hours chart, the pair established above a bullish 20 SMA, while technical indicators hold within positive territory but losing upward strength, indicating easing buying interest. The 1.3220 region has proved strong in the past, with a recovery up to 1.3300 possible on an upward acceleration through the level," Valeria added.
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