The Pound remains relatively unchanged as domestic political issues remain unsolved. The UK PM candidate Boris Johnson continues to refrain from turning down the chances of hard Brexit but promises to form a “war cabinet” to deliver Brexit within the first 100 days of his mandate. During the weekend, the US and Chinese leaders finally agreed to halt further escalation in a trade war for now. Though with key issues concerning the technology transfer and intellectual property rights still remaining unresolved, market participants fear of problems to persist during future negotiations between the world’s two largest economies. In terms of macroeconomics, the British Chambers of Commerce (BCC) recently said that the UK factories’ exports slumped to the lowest in four years, which could also affect negatively the June Manufacturing PMI data, any further contraction will most likely weaken the Cable in the short-term.
The Sterling is still stuck between 1.2715 and 1.2660 with no clear bias yet. The 50 and 200-day moving averages are crossing over but without any real signal. The bulls are waiting for a break above 1.2715 to confirm further gains towards 1.2760 and the bears on the other hand will need to take out 1.2660 support to push the Cable towards 1.26.
Support: 1.2660 / 1.26
Resistance: 1.2715 / 1.2760