GBP/USD recovers as UK politics turn positive, US data in the spotlight

  • Brexit positive news triggered the pair’s recovery.
  • The US data and political headlines in the spotlight for now.

The GBP/USD pair is on the bids around 1.2910 ahead of the London open on Wednesday. The pair recently benefited from the UK’s positive headlines for Brexit. However, some of the frontline data from the US could steal the show during the later part of the day.

Not only the British lawmakers’ support to continue the cross-party Brexit talks but the UK PM Theresa May’s readiness to present her Brexit proposal fourth time in the parliament for a vote during some time in early June also pleased the British Pound (GBP) buyers off-late.

Though, the optimism remains capped as recent reports suggest the opposition Labour party is still being hard against the Tories and stands ready to turn down the proposal if PM May refrains from giving further concessions on Brexit.

Other than the uncertainty surrounding the Brexit, April month retail sales and industrial production, together with May’s NY Empire State manufacturing index, from the US might as well entertain momentum traders.

Expected decline in the Empire State manufacturing gauge to 8.5 from 10.1 could confront a likely increase in the industrial production growth figure of +0.2% from -0.1% prior. Further, the headline retail sales might soften to 0.2% from 1.6% on MoM whereas retail sales ex-autos, known as core retail sales, is expected to flash 0.7% increase versus 1.2% prior. Moreover, retail sales control group figure might also decline to 0.4% from 1.0% earlier.

Technical Analysis

If prices continue to recover, 200-day simple moving average (SMA) around 1.2960, 1.3000 round-figure and 1.3010 comprising 100-day SMA can entertain buyers ahead of challenging them with 50-day SMA level of 1.3075.

Alternatively, an upward sloping trend-line stretched since mid-February at 1.2890 can act as immediate support, a break of which can fetch the quote to April lows near 1.2860. Given the increase downturn under 1.2860, 1.2830 and 1.2770 could come back on the chart.

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