GBP counter-trend rally is in the offing
Used with permission from Bloomberg Finance LP, as of 19 August 2019.
GBP/USD ended last week (ended 16 August) as the best performing G-10 currency pair, breaking out of a four-week losing streak.
The short covering from a recent 1.2015 low appears driven by Brexit-related news again, as Labour Party leader Jeremy Corbyn urged the opposition (and likely Tory rebels) to unite and make him caretaker Prime Minister, to stall what looks like a no-deal Brexit march by UK Prime Minister Boris Johnson.
The market will be on the lookout for reaction to news that comes from two fronts. The first would be a broader view from the annual Jackson Hole economic symposium that is happening on Saturday (24 August). Here, the highlight is whether Federal Reserve Chair Jerome Powell will signal openness to more aggressive easing, in his speech titled “Challenges for monetary easing”, and move away from his labelling of the July 25 bps rate cut as a “mid-cycle adjustment”.
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