GBP/USD: Higher lows on daily sticks favor bulls amid Brexit risks

  • GBP/USD remains firm while portraying higher low formation as summer recess in the UK parliament tame no-deal Brexit noises.
  • Boris Johnson and the company prepares for no-deal Brexit while few lawmakers plot to oust the PM.
  • Trade tussle between the US and China offers intermediate moves.
Although the no-deal Brexit concerns are widely discussed, the GBP/USD pair forms a higher low pattern on the daily chart since the start of the month. The quote presently takes the bids to 1.2166 while heading into the Thursday’s London open.

While news of full-fledged preparations of a no-deal Brexit by the UK lawmakers keeps making the rounds, the latest report from the Sun says that the UK Prime Minister Borish Johnson could call for a general election just following the Brexit, on November 01, to gain the support of Leave voters.

It should be noted that some among the Tory rebels are plotting to oust PM Johnson in a case he fails no-confidence vote, which is likely being taken on early September by lawmakers who fear hard Brexit.

Elsewhere, the EU has already turned down the British request for renegotiations but the UK politicians aren’t stepping back and keep a no-deal Brexit scenario live unless the bloc offers a new deal.

On the other hand, the US-China trade tussle becomes the key issue off-late. The US continues to take measures like tariffs and banning purchases for government departments while Chinese Yuan depreciation works better for the dragon nation.

Investors will now keep an eye over weekly Initial Jobless Claims numbers from the US in absence of major data/events. However, the importance of the trade/political headlines to trigger fresh market moves can’t be denied.

Technical Analysis

Although a week-old higher-low formation portrays the pair’s strength, 200-HMA level of 1.2173 and July-end high of 1.2251 offer strong immediate resistance, which in turn increases the importance of 1.2212 level comprising 23.6% Fibonacci retracement of last week's declines. It should also be noted that the pair’s slip beneath 1.2212 might not refrain from fetching the quote to a monthly low near 1.2080.