GBP/USD: Bears Comeback Near 1.3600, PMIs And Conservatives Meeting Anticipated

The GBP/USD remained on the back foot at 1.3590, down 0.13 percent intraday going into Tuesday’s London market open. Because of Brexit issues, as well as concerns originating from China and the United States, the currency pair suffered its first daily drop in four days.

David Frost, the UK’s Brexit Minister, has reaffirmed his caution to the European Union (EU) about abolishing the Northern Ireland (NI) agreement, citing the strict constraints that apply to goods traveling between the United Kingdom and Northern Ireland region. When asked what involvement President Biden might have in the negotiations, the diplomat responded, “I believe this is a dialogue between us and the European Union. Outsiders are sort of interested onlookers, but not more than that.” – reported the Independent, 

Conservative Summit and PMIs

According to The Guardian, meat producers in the United Kingdom (UK) blame Prime Minister (PM) Boris Johnson for the cause of a shortage of workers in the industry. In an article published by the Associated Press (AP), Prime Minister Boris Johnson said he is prepared to take “bold measures” to restore the economy following the coronavirus crisis when his Conservative Party convenes for its first annual meeting since 2019.

On the other foot, speculation surrounding Chinese major businesses Fantasia Holdings Group and Sinic, as well as lack of certainty over US infrastructure investment and the advancement of the debt ceiling, has weighed on the market’s perception, supporting the demand for the US Dollar as a relatively secure asset. In this environment, the US 10-year Treasury yields broaden the earlier day’s retrieval moves to 1.50 percent, up 1.7 basis points (bps), while equity markets continue to stay sluggish, and the US Dollar Index (DXY) goes up near 0.17 percent on a day as the bulls push the index above the 94.00 mark.

Even though the risk-off mindset and Brexit concerns are weighing on the GBP/USD rates, the last readings of the UK Markit Services PMI for September and the US ISM Services PMI for the same month, which are anticipated to be 60 and 61.7, respectively, will be critical to monitor for extra information.

Analysis Of A Technical Nature

GBP/USD CHART. Source:  Tradingview.com

Notwithstanding the upturn, the GBP/USD is still moving underneath the 50 Moving Averages on the four-hour chart. Additionally, it stays below the 100 and 200 SMAs. The Bulls, on the other hand, may be motivated by the upward shift in pace. The Relative Strength Index (RSI) is at a healthy level of equilibrium. By and large, bears are dominant.

The first support level to monitor on the negative is 1.3520, which was a turnaround high last week. A little farther down, 1.3430 catalyzed the Cable’s rebound and the round 1.34 threshold – the recent 2021 bottom – is the next threshold to monitor. The day high of 1.3575 serves as instant opposition. It is preceded by 1.3610, the pre-crash low, and then by 1.3655.