GBP/USD trades modestly flat as traders await US CPI amid UK’s political play

While British lawmakers’ run to become the next PM remains surrounded by long-standing Brexit worries, traders weigh lack of UK data while taking the rounds of the GBP/USD pair near 1.2720 ahead of the London open on Wednesday.

The lead runner for the UK Prime Minister Boris Johnson is all set to announce begin his campaign with a single motto of leaving the EU on October (be it with or without the deal). However, some of the Tory backbenchers and the opposition Labour party members are likely to unite against the hard Brexit. The members of the parliaments (MPs) may propose a motion to stop hard Brexit either on Wednesday or on Thursday.

Apart from politics, the British Pound (GBP) recently portrayed upbeat results from the UK average earnings numbers and became the best G10 currency. Though, absence of economics for today confines the trading sentiment.

Additionally, the US President’s tweets threatening China and pushing the Federal Reserve towards a rate cut seem to have gained less importance off-late. It should also be noted that President Trump’s praise to Mexico and likely 90-day’s grace period to perform the “secret” deal grabbed a few attention as well.

Given the lack of economics from the UK, headline consumer prices index (CPI) data from the US will be in the spotlight. The CPI is expected to weaken to 0.1% from 0.3% on MoM basis while declining to 1.9% from 2.0% on the yearly format. Further, the CPI ex-food and energy can increase to 0.2% from 0.1% on a monthly basis but might remain unchanged at 2.1% a YoY format.

Technical Analysis

1.2640 and 1.2600 hold the gate for the pair’s extended downturn to May-end low near 1.2560 while recent highs and February low between 1.2760 and 1.2775 can limit the pair’s near-term upside ahead of fuelling the quote to April month bottom around 1.2865.