GBP/USD struggles to find direction above 1.2300 ahead of UK PMI

GBP/USD drops to 1.2325, down 0.07% on a day, while heading into the London open on Thursday. A lack of major catalysts held the Cable pair tightly during Asia. Though, the key UK PMI and US Jobless Claims, coupled with activity numbers, will offer an active session ahead.

Tories under attack….

On Wednesday, the cabinet members getting their first chance to criticize the PM Boris Johnson and Company’s mishandling of the UK’s coronavirus (COVID-19) crisis. Not only shortages of medical supplies and a surging death toll beyond 18,100 but fewer nurses due to the Brexit were also being targeted on the standing leader Dominic Raab.

In response, the deputized PM defied the claims and marked nearness to the peak of the outbreak, together with the Health Secretary Matt Hancock, while also suggesting the start of the human trials over 300,000 people in a year.

Elsewhere, City A.M. marked a divide between the Tory negotiators when it comes to the Brexit. “Civil servants are increasingly frustrated that the government refuses to countenance the idea of an extension, while political appointees are keen to press home the UK’s departure,” said the news.

On the positive side, UK Metro quoted Downing Street as saying that the PM will be holding his regular audience with the Queen via telephone later this week, even though his deputy Dominic Raab is officially leading the country in his absence.

On the US side, President Trump kept pushing for the economic restart while threatening Iran and turning down the fears of a further outbreak.

Amid all these, the US 10-year Treasury yields decline to 0.60% with stocks in Asia trimming the early-day gains.

Moving on, the preliminary readings of March month’s Markit PMIs become the key to determine the near-term direction of the Cable, the reason to blame is the virus outbreak during the period. FXStreet’s Yohay Elam says, “If the data comes out below expectations, pound/dollar has room to fall as it would reveal growing pessimism among decision-makers. It would also show that the current situation is worse than previously perceived. If the figures meet expectations, they would still de gloomy. Sterling may hold up in its range in the immediate aftermath but fall afterward. Ongoing weak figures may take their toll.”

While the forecasts suggest downbeat readings of the key Manufacturing and Services PMI figures, respectively to 42 and 29 versus 47.8 and 34.5, Reuters mentions, “there is still a net $3.2 billion worth of bets that the pound will go up, but that number has been falling for the last six weeks.

Following the UK data, a heavy economic docket from the US will also be watched while pandemic details could offer intermediate clues.

Technical analysis

A seven-day-old falling trendline near 1.2395 restricts the pair’s short-term upside whereas an upward sloping trend line since March 27, around 1.2210, seems to be the immediate support.