GBP/USD on the back foot ahead of UK’s monthly production details

• Risk-on receives more response amid challenges to the front runner of the UK’s leadership race.
• The economic calendar to gain major attention while politics can play background music.

With the latest risk-on sentiment is helping the US Dollar (USD) to recover some of its latest losses and political uncertainty surrounding the UK, the GBP/USD pair remains on a back foot to 1.2715 while heading into the London open on Monday.

Three days prior to the decision on the ruling Conservative party’s leadership, the front runner Boris Johnson got a weak spot from France concerning his promise to not pay the Brexit bill. The UK Telegraph quoted sources close to the Fresh President terming such promise by Britain’s ex-Foreign Minister as sovereign debt default.

Negatives were also shared by the Financial Times when saying that the EU is to warn businesses not to expect help over a no-deal Brexit.

On the other hand, avoidance of the US tariffs on Mexico and G20 finance leaders’ refrain from highlighting the US-China tussle, not to forget brighter chances of trade talks between these two economies, have recently triggered risk-on sentiment in global financial markets. The US 10-year treasury yields are up nearly 3 basis points to 2.119% by the press time.

At the economic front, monthly industrial and manufacturing production details will join GDP figures from the UK whereas JOLTs job openings can fill the US data-line. While the manufacturing production is expected to soften to 1.3% from 2.6% on YoY during April, the monthly figures might register +0.2% growth against +0.9% earlier expansion. Further, British industrial production MoM bears the consensus to mark 0.1% growth versus +0.7% earlier while British GDP contracted -0.1% during March.

In the end, the US JOLTS job openings may slip to 7.240 million from 7.488 million earlier.

Technical Analysis

While 1.2670 and 1.2600 are likely nearby supports for the Cable, 1.2760/75 area comprising multiple highs marked since May 20 and February month low seems a tough upside barrier to the pair’s rise towards April month bottom around 1.2865/70.