- GBP/USD is holding on to modest gains after reversing from the previous day’s 7.5-month high.
- UKICE reports no likely change to Brexit terms despite UK’s latest woes.
- Due to concerns over UK tax cuts in the upcoming budget, the Tory leader’s tax inquiry is also looking into Cable buyers.
- UK/US PMI preliminary data for January, BOE’s Pham looked for fresh impetus.
GBP/USD slips near 1.2380-85 as bulls flex their muscles ahead of key UK activity data heading into Tuesday’s London open. Even so, there are concerns about Brexit and UK tax as well as slow markets are a challenge cable a few buyers recently.
A report by academic body UK In a Changing Europe (UKICE) revealed on Tuesday that despite Britain’s significant economic hit from leaving the bloc and declining support for Brexit among the British public, there have been major changes in the UK-EU relationship. were unlikely. The news shared by Reuters also signaled that neither the European Union (EU) nor the UK is seeking to renegotiate the Trade and Cooperation Agreement (TCA) signed in December 2020, which in turn suggests further stalemate on a key issue and challenges for the GBP/USD pair.
On the other hand, British Prime Minister Rishi Sunak needed to push an independent ethics adviser into a tax case with the Conservative Party leader because Nadhim Zahawi was flagged as irregular in filings. Additionally, chatter about Britain’s readiness to propose a carbon border tax as part of an aid package for the steel industry, according to the Financial Times (FT), also appears to be weighing on GBP/USD buyers. In addition, the mixed games of Tory pressure to cut taxes and UK support in contrast also highlight taxes as a key challenge for the UK government in recent times.
Elsewhere, US dollar index remains stagnant amid the absence of Fed talks and holidays in China. Along the same lines could be the fights between the US and China over the ties of Chinese companies to the Russian war effort and the US debt ceiling in the Senate seemed to check the upward momentum of the GBP/USD pair.
Against this backdrop, S&P 500 Futures are resisting Wall Street gains while retreating from the previous day’s six-week high to round at 4,030-35 at the latest. Along the same lines, US 10-year and 2-year Treasury yields quickly extended a three-day rally, struggling at 3.51% and 4.21% at press time.
GBP/USD could see a decline amid cautious sentiment ahead of the first reading of January’s S&P Global PMI and US Q4 Gross Domestic Product (GDP). The speech from Bank of England (BOE) member Caroline D. Pham.
Although many barriers around 1.2450 challenge the GBP/USD bulls, a bearish bias remains off the table unless the quote remains behind the ascending support line from 12 October 2022, near 1.2015 as of press time.