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Thomson Reuters
Jul 10 - 02:36 PM
GBP/USD - COMMENT-GBP/USD Bulls Helped By Powell, But Brexit Overhang Persists
First appeared on eFXplus on Jul 10 - 12:20 PM

GBP/USD is holding on to early NorAm gains, bolstered by Fed Chair Powell as he reiterated the Fed's willingness to keep the U.S. economic expansion on track.
Action has the pound straddling 1.2500 as it moves back within its 30-day Bolli envelope.
With results from the Tory leadership elections expected by July 23, hard-line Brexiteer Boris Johnson remains the front-runner, and his leave the EU with or without a deal policy keeps no-deal Brexit sentiment very much alive.
The heightened no-deal sentiment, in addition to tempering domestic and foreign investment in the UK, has also reduced sentiment for "gradual" BoE hikes in the near-term.
In fact, UK short-sterling futures now eye a potential BoE cut by March 2020.
Bullish sentiment for the pound remains challenged, and since putting in its 2019 high versus the dollar in March, at 1.3380, GBP momentum has been decidedly lower.
Thus, despite today's rise, GBP/USD remains very close to 2019's low at 1.2409.
A Johnson victory and increased no-deal Brexit sentiment puts tipped stops below the 2019 low in view and should embolden bears to make a run at the Jan 2017 low just below 1.2000.

GBP Chart: Click here

Thomson Reuters IFR Research/Market Commentary


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