GBP/USD price action is seen hugging the key hourly moving averages
Currently, all the talk is about Boris Johnson assembling his Brexit “dream team” but there is also chatter about a potential no-confidence motion being called against the government.
The thinking here is that Johnson needs to be challenged either today or in the first few days after the summer recess in order to prevent a no-deal Brexit from taking place. Otherwise, it would be too late to prevent things once the wheels get put into motion.
However, Labour has come out to say that they won’t back a no-confidence motion today as they fear it would only solidify Johnson’s position. Hence, there is a lot of waiting and pondering ahead of the summer recess after the parliamentary session today.
As for cable, the price action suggests that traders are seen wanting as price has been hugging the key hourly moving averages since overnight trading. Essentially price is bouncing between 1.2470 and 1.2490 while pivoting around the 100-hour MA (red line) and 200-hour MA (blue line) over the past few hours.
The issue for pound traders moving forward is that there is still a lot more waiting to do as UK lawmakers will observe a break after today up until 3 September. That means we’ll see a prolonged period where there may not be any substantial Brexit updates.
As such, I reckon the pound may hold more steady on relief that the spotlight is turned off but at the same time traders will have more time to digest what a Boris Johnson premiership means for the UK and Brexit.
All signs point towards an election now so unless his “dream team” can unify parliament in some miraculous way, there’s still plenty of uncertainty left for the pound come September and that will eventually weigh on the currency when the spotlight returns.