Pound softens further in Asia

 

Boris Johnson wins vote

The pound traded lower from opening levels during the Asian morning, but failed to take out yesterday’s one-week low in the aftermath of Boris Johnson winning the Tory Party leadership race by a large margin. Today could be the fourth consecutive down-day in a row for GBP/USD, the longest stretch since mid-June. The next possible technical support level could be found at the downward-sloping trendline drawn from the May 23 low, which is about 1.2363 today. GBP/USD is currently trading at 1.2430.

 

GBP/USD Daily Chart

Source: OANDA fxTrade

 

UK gets a surprise growth upgrade

In its July World Economic Outlook, the IMF downgraded its global economic forecasts for this year and next by 0.1% from its April review. It now sees growth at 3.2% for 2019 and 3.5% for 2020. Downgrades were also made to China’s growth estimates by 0.1% for each year, and are now at 6.2% for this year and 6.0% for 2020.

In contrast, the IMF upgraded its growth forecast for the UK to 1.3% from 1.2%. However, that estimate is based on an assumption of an orderly Brexit followed by a gradual transition to the new era. The Fund named a no-deal Brexit as one of the key risks to both UK and global growth.

 

Flash PMIs top the agenda

It’s a day of flash PMI readings from Markit for July today, with most estimates suggesting a mild improvement from June. Germany’s manufacturing PMI is expected to increase to 45.2 from 45.0 with the reading for the Euro-zone probably held steady at 47.6, according to the latest survey of economists.

In the US session, the Markit manufacturing PMI is seen rising to 51.0 from 50.6. Aside from the PMI, we see US new home sales for June, which are expected to rise 6.0% m/m, a strong rebound from May’s 7.8% drop.

 

The full MarketPulse data calendar can be viewed at https://www.marketpulse.com/economic-events/

 

OANDA Senior Market Analyst Craig Erlam gives his reaction to Boris Johnson winning the race to become Prime Minister and previews the upcoming week which includes an ECB rate decision, US GDP release and numerous company earnings.

Source: MarketPulse

 

 

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Andrew Robinson

Andrew Robinson

Senior Market Analyst at MarketPulse
A seasoned professional with more than 30 years’ experience in foreign exchange, interest rates and commodities, Andrew Robinson is a senior market analyst with OANDA, responsible for providing timely and relevant market commentary and live market analysis throughout the Asia-Pacific region. Having previously worked in Europe, since moving to Singapore he worked with several leading institutions including Bloomberg, Saxo Capital Markets and Informa Global Markets, proving FX strategies based on a combination of technical and fundamental analysis as well as market flow information. Andrew began his career as an FX dealer with NatWest and the Royal Bank of Scotland in the UK.
Andrew Robinson

Latest posts by Andrew Robinson (see all)