GBP/USD treads water below 1.3300 amid pre-NFP trading lull
- GBP/USD looks for a firm direction around the weekly lows after declining for two consecutive days.
- UK PM Johnson adds to the increased odds of a no-deal Brexit, Chancellor Sunak warned over tax hike chatters.
- UK-US talks will resume on September 08, British tribunal to investigate Uighur claims of ‘genocide’.
- British Construction PMI, speech from BOE’s Saunders may entertain momentum traders ahead of the US NFP.
Having dropped during the last two days, GBP/USD wavers around 1.3280 while heading into the London open on Friday. In doing so the Cable seesaws near the weekly bottom and ignores downbeat catalysts, like Brexit woes, tax hikes, ahead of the key US Nonfarm Payrolls (NFP).
British PM Boris Johnson has demanded that British fishermen double the size of their catch from Britain’s coastal waters, leading to a deadlock in post-Brexit trade and fisheries talks, per the UK Times. This comes after the Tory leader’s spokesperson criticized comments from the European Union (EU) Brexit negotiator Michael Barnier relating to their proposals. The move increases the odds of a no-deal Brexit and helps JP Morgan to say, “there was about a one-third chance of a no-trade deal Brexit at the yearend but the brinkmanship between Britain and the EU over coming months would make it appear a much greater risk.”
On the other hand, the UK-US trade talks will resume on September 08 while the London-Tokyo negotiations are on a positive side off-late.
Elsewhere, British Composite PMIs suggest an acceleration in the August month job losses even as the UK PM pushes people towards the work. Further, the UK Chancellor Rishi Sunak is repeated being warned by the Tory backbenchers amid fears of 'wrong kind of tax rises' could stifle the economy, said the Telegraph. It should also be noted that the UK’s tussle with China is likely to escalate as “a prominent British human rights lawyer is convening an independent tribunal in London to investigate whether the Chinese government’s alleged rights abuses against Uighur Muslims in the far western Xinjiang region,” said the Telegraph.
Like Britain, the US is also grappling with China but was recently hit on Wall Street as China’s flaunts plans to be “self-dependant” over the semi-conductor demand after the Trump administration’s sanctions over the Beijing’s diplomats.
Against this backdrop, the traders remain cautious ahead of the key US employment data that are probing the greenback’s three-day winning streak near a monthly resistance line.
Read: Nonfarm Payrolls Preview: Fed’s policy shift to introduce vital noise
Other than the US jobs report for August, the UK Construction PMI, expected to rise from 58.1 to 58.5, will join comments from another BOE policymakers to direct short-term GBP/USD moves.
Technical analysis
Bearish MACD on the daily chart favors further selling to the support line stretched from July 20, around 1.3220. However, the pair’s bounce off 10-day SMA near 1.3265 can push the quote towards 1.3350 and 1.3400 immediate resistances.