GBP/USD: Bears back in charge amid renewed Brexit jitters, ahead of US GDP

  • GBP/USD is in bearish consolidation as Hard Brexit fears, risk-aversion weigh.
  • Markets await fresh Brexit updates and US GDP data for fresh directives on the spot. 
Following a volatile Thursday, GBP/USD sees a calm session so far this Friday, with the bias leaning to the downside amid increased odds of a no-deal Brexit and cautious sentiment ahead of the key US macro data, Fed and trade talks.  

The bears are consolidating the previous declines, triggered by above-forecast US durable goods, wholesale sales and jobless claims data that advocated a less aggressive July Fed rate cut and boosted the US dollar across its main competitors. Fed is likely to meet next week on July 30th-31st for its monetary policy review.

Brexit jitters back in play

The Cable sell-off could be also attributed to fresh Brexit concerns amid the UK Cabinet overhaul by the new UK PM Boris Johnson, with most senior positions filled in by ardent Brexiteers, who back the case for the UK leaving the European Union (EU) on October 31st with or without a Brexit deal.

Moreover, the latest reports, citing that Johnson is in favor of no Irish back-stop, also continue to keep the bearish pressure intact around the pound, as it lifts the prospect of a no-deal Brexit.  “Meanwhile, UK election risks are rising which keeps the outlook for sterling volatile for the months ahead of where a bearish bias persists,” FXStreet’s analyst, Ross Burland, notes.

Attention now turns towards the critical US advance GDP figure for the second quarter that is likely to influence the Fed’s course of action in the coming months while the GBP markets look forward to fresh Brexit/ UK politics-related developments. Traders are also likely to remain unnerved ahead of next week’s US-China trade talks and Fed outcome.