GBP/USD slumped to multi-month lows. The strong bearish momentum pushed the price below 1.25 with a daily close.
The breaking news from the UK is the appointment of Boris Johnson as the UK's prime minister after Theresa May left the chair earlier this year. Boris's party is fracturing and his majority is shrinking. Besides, a crisis is simmering in the Strait of Hormuz, where has seized a British-flagged tanker. Public services are contracting, the British economy is stalling, and the pound sterling has got stuck at record lows. In just 99 days, the country is set to depart from the European Union. The no-deal Brexit could evolve into the biggest crisis since the war. British grocery sales fell by 0.5% in the latest 12-week period in their first decline since June 2016 which lead to further GBP weakness.
Additionally, Brexit is expected to prevent the UK's central bank to raise interest rates as the economy is not quite overheating but the growth is very weak. The economic calendar lacks macroeconomic reports from the UK this week that can subdue volatility for GBP/USD. Recently UK CBI Industrial Order Expectation report was published with a significant decrease to -34 which was expected to be unchanged at -15. Today High Street Lending report is going to be published which is expected to have a minor change with expectation to increase to 42.9k from the previous figure of 42.4k.
On the other hand, US President Trump has targeted the Federal Reserve for its rhetoric. A 50-basis point rate cut is most expected at the July meeting if the central bank gives in to the government pressures. But Fed officials stated that they would not bow to political pressure. Besides, several officials said that growing risks to the economy justify a rate cut. Policymakers expressed concerns that a global economic slowdown and international trade conflicts could derail economic growth in the US despite recent upbeat economic data.
This week, US Durable Goods Orders are expected to rebound to 0.8% from the previous value of -1.3% and Core Durable Goods Orders are expected to decrease to 0.2% from the previous value of 0.4%. Moreover, on Friday, US preliminary GDP report is also going to be published which is expected to contract to 1.8% from the previous value of 3.1% while flash GDP Price Index is expected to increase to 4.0% from the previous value of 0.9%.
Today US Flash Manufacturing PMI report is going to be published which is expected to increase to 50.9 from the previous figure of 50.6 and Flash Services PMI is expected to edge up to 51.6 from the previous figure of 51.5. Moreover, New Home Sales are expected to expand to 659k from the previous figure of 626k and Crude Oil Inventories are expected to contract by 4.2M from the previous 3.1M drop.
Now let us look at the technical view. The price is currently quite volatile having no definite trajectory following the previous bearish momentum below 1.25. The price is currently expected to climb higher towards 1.2450-1.2500 before any further bearish momentum is resumed. As the price remains below 1.25 area with a daily close, the bearish bias is expected to continue.
