GBP/USD remains below 100-day SMA on "Super Thursday"
- GBP/USD struggles around 1.2470 amid Brexit uncertainty, the USD pullback.
- EU leaders agree for another Brexit extension while demanding Irish border solution in 15-day’s time.
- UK Retail Sales, BOE, Supreme Court hearing on PM Johnson’s Parliament prorogation together constitutes a key day.
With the mixed Brexit headlines and the US Dollar (USD) pullback playing contrasting tunes, the GBP/USD pair remains under 100-day SMA while heading into the London open on Thursday.
The Cable followed major market reaction to the Fed’s hawkish rate cut by declining below near-term key SMA. Adding to the pair’s downpour was weaker than anticipated British Consumer Price Index (CPI) details for August month. However, news that the European Union leaders are ready to offer another Brexit extension to the United Kingdom (UK), if needed, curbed the quote’s further declines.
Recent news suggests the EU’s push for a clear plan concerning the Northern Ireland border after the Brexit. Though, no-deal worries conveyed by German Finance Minister and the Democratic Unionist Party (DUP) leader Arlene Foster’s shift in support increases the odds of a deal between the EU and the UK in near future.
Elsewhere, the risk tone seems to fall short of holding post-Fed optimism amid an eventful Asian session comprising New Zealand growth figures, Aussie employment data and Bank of Japan (BOJ meeting details. As a result, the US 10-year treasury yield flashes 1.790% mark while writing the article.
Moving on, UK Retail Sales for August will be followed by monetary policy decision from the Bank of England (BOE) and a final verdict on the three-day-long hearing on whether the UK Prime Minister (PM) Boris Johnson acted unlawfully while recently proroguing the parliament. Additionally, second-tier housing and manufacturing data from the US should also be observed together with trade/political headlines, for intermediate momentum.
While the UK Retail Sales is expected to decline to 0.0% and 2.9% versus 0.2% 3.3% respective priors on MoM and YoY basis, the BOE isn’t likely to offer any changes to its current monetary policy but could speak of Brexit fears via rate statement. On the other hand, the US Existing Home Sales and Philadelphia Fed Manufacturing data might also portray weaker than previous readings.
Technical Analysis
Repeated failures to break 100-day simple moving average (SMA) highlights the importance of 1.2385/80 horizontal support, including July 17 low and September 09 high, a break of which can fetch prices further down towards August high of 1.2310. Alternatively, pair’s sustained run-up beyond 100-day SMA level surrounding 1.2500 will trigger fresh rise to mid-July tops nearing 1.2580.