- Cautious trading expected amid softer USD, Brexit anxiety as Johnson set to replace PM May.
- UK political news to grab some attention amid the UK, US holiday.
The GBP/USD pair is seen consolidating the overnight surge to 1.2755 levels, as the recovery mode remains intact on the 1.27 handle heading into quiet European trading ahead. The UK markets are closed today in observance of Spring Bank holiday.
Upside seems limited amid Brexit chaos
The ongoing recovery in the spot received a further boost after the pound cheered the early news that the Brexit Party received the highest number of votes in the European Union (EU) elections. The pair regained momentum on Friday after the UK PM May announced her resignation on June 7th and markets adopted the “Buy the fact” trading strategy.
Further, broad USD weakness amid a recent slew of weak US fundamentals and liquidation ahead of the long weekend in the US added to the Cable recovery from four-month lows of 1.2605 reached last Thursday.
Despite the renewed upside, markets remain wary amid ongoing UK leadership challenges, with the Brexit hard-liner Boris Johnson likely to be the next successor. Johnson’s hard Brexit stance is likely to keep the GBP traders on the edge that could keep a check on the corrective upside.
In the day ahead, the pair will remain at the mercy of the risk trends and USD dynamics amid holiday-thinned volumes and lack of fresh catalysts while Brexit and trade-related headlines will continue to remain the main market drivers.