GBP/USD: Bears attack 1.2850 as UK policymakers keep Internal Market Bill on table

• GBP/USD fails to extend pullback from the seven-week low.
• Fewer odds against the Tory-led Internal Market Bill (IMB), due to the Conservative majority, worry markets.
• Vaccine hopes triggered by AstraZeneca fades, UK PM Boris Johnson keeps pushing for the IMB, if not now then by the year-end.
• UK Employment data will be the key to watch.

GBP/USD stays depressed near 1.2848 at the start of Tuesday’s Asian session. The pair recently took clues from the Tory party’s ability to crush the opposition Labour Party’s attempt to block the IMB.

Read: Breaking: UK government defeats Labour amendment to Internal Market Bill

Although market consensus challenges the passage of UK PM Johnson’s Bill in the upper house, due to the Tory rebellion taking support form ex-PMs, the majority of the Conservative Party worries the outcome as the Members of the Parliament (MPs) debate the key bill in the House of Commons.

With the 80 seat majority, Tories can easily let the bill become the law and endanger the Brexit Withdrawal Agreement Bill (WAB). However, the backbenchers are gaining momentum with four previous Prime Ministers (PMs) shaming the bill as spoiling reputation.

Considering the latest development of removing the first blockage by the Labour Party, the Brexit negotiations between the European Union (EU) and the UK in Brussels, starting this week, are likely to go tough and can exert additional downside pressure on the Cable.

Other than the chatters surrounding IMB and WAB, traders will also keep eyes on the UK employment data. TC Securities say, “Will this be the month that the unemployment rate finally starts to rise? We think that July could finally see the first uptick, and look for the unemployment rate to rise to 4.3% (market forecast 4.1%), although recognize the huge amount of uncertainty around that figure. We suspect that we'll see more people rejoin the labor force with shops, restaurants, and pubs finally open again, which will boost the number of unemployed, assuming that only some of those jobseekers will actually find work right away.”

It’s worth mentioning that the hopes of the global central bankers’ push for further easy money policies join the early-week optimism to recently propel Wall Street. However, further upbeat sentiment depends upon an active day and development of the risk catalysts.

Technical analysis

100-day EMA near 1.2825, followed by the recent multi-month low around 1.2760, offers immediate support to the quote whereas the recovery moves can be blocked by August month’s low near 1.2980.