GBP/USD: Buyers and sellers struggle over no-deal Brexit fears around 1.2740
- No-deal Brexit fears take over the Cable’s latest surge led-by the greenback decline.
- Boris Johnson keeps sticking to October 31 deadline, favors soft Irish border.
- Lack of data highlights political plays as the key driver.
With the UK PM candidate Boris Johnson’s sustained commitment to leave the EU on October 31 highlighting no-deal Brexit fears, the GBP/USD pair buyers fall short of cheering the broad US Dollar (USD) weakness off-late. With this, the Cable trades on the back foot around 1.2740 during the early Asian session on Tuesday.
While most major currencies benefited from the greenback’s latest slid past-FOMC, the British Pound (GBP) refrained from notable gains on Monday amid pessimism surrounding the hard Brexit if Mr. Johnson, who is by far the most favorite for the UK Prime Minister’s post, takes over Jeremy Hunt.
The ex-London Mayor, Johnson, recently came under pressure from political fraternity over likely house abuse with his girlfriend. However, he never explained the reasons and the matter seems off the table for now.
At the start of Tuesday, the BBC interviewed the PM candidate and the same October 31 deadline was repeated, renewing the no-deal pessimism. He added that he thinks of having the parliament support for no-deal Brexit.
Additional comments from Mr. Johnson signals his favor for no hard Irish border post-Brexit and readiness to follow WTO rules if the EU raises barriers into his exit plan.
It was also revealed in the UK Telegraph news that some of the EU countries are exerting pressure on Ireland to present the details of how it could counter the no-deal Brexit scenario.
Given the absence of major data/events on the economic calendar, traders might keep focusing on political plays for fresh directives.
Unless breaking the 1.2760/70 area comprising latest highs, the Cable is less likely to aim for 50-day simple moving average (SMA) level of 1.2810 and the April month low near 1.2865. As a result, the pair’s pullback to 1.2670 and 1.2610 becomes a live possibility.
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