GBP/USD rebounds firmly towards 1.2600 ahead of UK no-confidence vote
- GBP/USD reverses NFP-led losses, as UK confidence vote in PM Johnson eyed.
- Risk-on market mood, USD retreat help cable stage a solid turnaround.
- A ballot will be held between 1700 and 1900 GMT later this Monday.
GBP/USD is trading strongly bid above 1.2550 so far this Monday, looking to retest the 1.2600 level ahead of the UK’s vote of confidence in PM Boris Johnson.
In doing so, cable has reversed most of Friday’s US NFP-led losses, as the US dollar retreats across the board amid the return of risk flows and holiday-thinned light trading.
The US Treasury yields hold the pullback, as investors reassess the Fed tightening outlook after the payrolls came in stronger than expected at 390K in May. The pause in the yields rally also adds to the weight on the buck.
The main catalyst behind the pound’s advance this morning, however, is the UK political headlines. GBP bulls cheer the news that a vote of confidence in the UK PM Boris Johnson will be held later in the day between 1700GMT- 1900GMT. The ballot will be immediately counted subsequently.
A spokesperson for Johnson's Downing Street office said, "the PM welcomes the opportunity to make his case to MPs (members of parliament) and will remind them that when they're united and focused on the issues that matter to voters there is no more formidable political force."
Markets believe that the vote will end months of speculation and allow the Johnson government to focus on other political and economic priorities if Johnson wins the vote of confidence.
This political scenario has come into being after a growing number of lawmakers in the governing Conservative Party questioned the British leader's flagging authority over the "partygate" scandal.
Meanwhile, a public holiday in most of the major European economies and a data-light US calendar will keep the focus on this UK political in the day ahead.
GBP/USD: Technical levels