GBP/USD – British pound slips after FM Johnson resignation

The British pound has posted slight losses in the Monday session. In North American trade, the pair is trading at 1.3247, down 0.28% on the day. On the release front, it’s a quiet start to the week, with no major events on the schedule. On Tuesday, the UK releases Manufacturing Production and trade balance.

The British government has plunged into crisis on Monday, following the stunning resignation of foreign secretary Boris Johnson. On Sunday, Brexit Secretary David Davis handed in his resignation, saying that the “Chequers Agreement” which the cabinet backed on Friday gave away too much to the European Union. Under that agreement, Prime Minister May presented concessions to the EU, with the UK agreeing to maintain current customs arrangement for manufacturing and agricultural products after Brexit. However, Brexit hardliners such as Davis and Johnson are against the agreement,  which they argue would force Britain to harmonize many of its regulations with Brussels. May is clearly in trouble, and this could mean turbulence for the British pound.

U.S employment data was a mix on Friday, as job growth remained above the 200-thousand level, but wage growth faltered. Nonfarm payrolls dropped to 213 thousand, but this beat the estimate of 195 thousand. Average Hourly Earnings edged lower to 0.2%, shy of the estimate of 0.3%. There was a surprise as the unemployment rate climbed to 4.0%, above the forecast of 3.8%. The data demonstrates that the U.S labor market remains strong, and the economy continues to perform well. The markets remain bullish on U.S growth, despite uncertainty in Europe and elsewhere, as well as the growing threat of an all-out trade war between the U.S and China.

  Boris Johnson Resignation Puts Pressure on PM Theresa May

  What does Davis resigning mean?

GBP/USD Fundamentals

Monday (July 9)

• 3:50 BoE Deputy Governor Ben Broadbent Speaks
• 15:00 US Consumer Credit. Estimate 12.2B
• 19:01 British BRC Retail Sales Monitor

Tuesday (July 10)

• 4:30 British Manufacturing Production. Estimate 1.0%
• 4:30 British Goods Trade Balance. Estimate -11.9B
• 10:00 US JOLTS Job Openings. Estimate 6.88M

*All release times are DST

*Key events are in bold

GBP/USD for Monday, July 9, 2018

GBP/USD July 9 at 11:05 DST

Open: 1.3285 High: 1.3363 Low: 1.3239 Close: 1.3247

GBP/USD Technical

GBP/USD ticked lower in the Asian session. The pair edged higher in European trade but has reversed directions and posted sharp losses in the North American session

• 1.3186 is providing support
• 1.3263 is a weak resistance line
• Current range: 1.3186 to 1.3263

Further levels in both directions:

• Below:  1.3186, 1.3088, 1.2996 and 1.2908
• Above: 1.3263, 1.3494 and 1.3613

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