- Further political developments and manufacturing PMIs are eyed by traders.
- Tuesday’s four-hour chart is pointing to further falls for the pair.
What is prime minister Boris Johnson’s new plan? With 30 days to the current Brexit deadline, the PM has denied that he has proposed customs checks around five miles from the border. Johnson described the idea as an “outdated” proposal – and Ireland already rejected it. Confusing headlines have been keeping GBP/USD pressured below 1.23.
The embattled leader is presiding over the Conservative Party’s annual conference in Manchester and may reveal his plans in a keynote speech tomorrow. The media reports that officials are ready for their last Brexit push. The Democratic Unionist Party (DUP) wants to limit any Irish-specific solutions to agriculture – their raison d’être is keeping the United Kingdom united and do not want a customs border between Britain and Northern Ireland. While the DUP no longer guarantees a majority for the Tories – as they have lost it after expelling 21 MPs from the party – they still consider the Northern Irish party’s opinions.
In the meantime, opposition parties have decided to refrain from tabling a Vote of No Confidence in the government this week. Labour, the Liberal Democrats, and the Scottish National Party may prefer to wait for Johnson to propose new ideas before trying to bring him down. Moreover, opposition leader Jeremy Corbyn is disliked by the Lib Dems and by former Conservative members – as well as by some members of his own party. Installing him at 10 Downing Street – even temporarily – has very low chances.
The pound received a small boost from the Markit/CIPS Purchasing Managers’ Index for the manufacturing sector. The forward-looking gauge rose to 48.3 points in September – better than expected but still contracting.
US data, Trump’s troubles
We’ve seen a small bounce this morning in the pound as the US ISM Manufacturing PMI showed the lowest reading in over 10 years as the protracted trade war with China and global slowdown weighed heavily. The gauge – which is the first hint towards Friday’s Non-Farm Payrolls – was projected to show a return to expansion in September but instead fell to 47.8, its lowest level since June 2009.
As China celebrates its National Day and begins a weeklong holiday – the trade front is set to remain quiet. However, developments related to Trump’s impeachment inquiry may move markets.
The latest revelations have been that Secretary of State Mike Pompeo was listening into the president’s controversial call with his Ukranian counterpart. Moreover, Trump also asked Australia’s PM for political information. Investors are following the developments, but have become less sensitive. A shift in opinion polls may move the needle.
GBP/USD Technical Analysis
GBP/USD is drifting below the 200 Simple Moving Average on the four-hour chart – another bearish development following the loss of the 50 and 100 SMAs and downside momentum.
Some support awaits the pair at 1.2270, which is today’s low. The next level to watch is 1.2240, which was a swing low in early September. It is followed by 1.2155, a trough from August, and then by 1.205 which provided support in mid-August.
Resistance awaits at 1.2310, which worked as both support and resistance in recent weeks. Next, we find 1.2350, which was a swing high on Monday, followed by 1.2390 and 1.2420.
Equities Contributor: FXStreet
Source: Equities News