- GBP / USD rose slightly, catching up with its peers as Brexit fears fade.
- Downing Street dismisses rumors that Prime Minister Johnson will step down in six months.
- Wednesday’s four-hour chart shows an improvement in the picture for the bulls.
Never believe a rumor until it’s totally denied? Speculation revolves around the political future of Prime Minister Boris Johnson. According to a Times column, Johnson’s special adviser Dominic Cumming’s stepfather said the Prime Minister was grappling with the effects of the coronavirus and could step down within six months.
Sir Humphry Wakefield’s sighting was quickly denied by Downing Street, but the publication in a highly regarded newspaper may continue to circulate as the government struggles to coordinate its policy around the disease.
Johnson’s alleged retirement would come after Brexit ends – the transition period expires at the end of the year. Rumors helped raise fears about the exit of a non-trade agreement out of the headlines and allowed the higher edge cable.
The British pound has also caught up with some of its peers after falling behind, but is now looking for direction ahead of the big event of the week, also linked to the catching up.
Jerome Powell, Chairman of the Federal Reserve, is expected to speak at the Jackson Hole Virtual Symposium and could present a paradigm shift in politics. Instead of aiming for 2% each year, the Fed would switch to medium inflation targeting (ACI) that would allow the price to exceed the 2% level and catch up with past low inflation.
Such a change involves keeping interest rates low for longer – which implies a weaker dollar. Yet as the wait continues, investors are somewhat nervous and the dollar is cutting losses. Relatively low volatility should give way to wilder swings once Powell opens his mouth.
American Durable Goods Orders are expected to show a continued recovery in July, in line with other bullish numbers such as new home sales released Tuesday – topping 900,000 on an annualized basis, the highest since 2006. In contrast, Conference Consumer Confidence Board fell to 84.8 in August. , the worst in about six years.
View Sustainable Product Orders July Sneak Peek: There Is Catching Up
The markets are stable because COVID-19 cases remain in their current trends – slowly rising in the United Kingdom and gradually falling in the United States. Hopes for a vaccine – including two UK projects – remain widespread. The University of Cambridge will receive government support for its vaccination project, in addition to the University of Oxford.
Overall, the main driver is Fed speculation, but politics and the virus also remain of great interest.
GBP / USD technical analysis
The pound / dollar broke through the 50 and 100 simple moving averages that previously peaked, providing ammunition for the bulls. On the other hand, momentum remains on the decline.
Support is expected at 1.3050 an early week support line. It is followed by 1.3005, which was a substantial cushion earlier in August. The next level is 1.2950 – where the 200 SMA hits the price.
Resistance is at 1.3180, a high in early August, followed by 1.3267, the peak in August. Higher, 1.3330 is looming.