10:07, 25 July
Rallies to 1.25 after New British PMIn the last few weeks the GBPUSD has eased lower after falling through the key 1.27 level. Less than two weeks ago, it fell to its lowest level in more than two years below 1.24 however it was quickly bought up and rallied to above 1.2550. The last three weeks has seen the sterling traded in a narrow range between 1.24 and 1.2550. Several weeks ago it reached a one month high near 1.28 before falling away.
The sterling has been attracted to the 1.27 level for the last two months as the GBPUSD has been content to trade very little and consolidate right around this level, up until a few weeks ago. This level may offer some resistance should the GBPUSD rally higher.
Significantly through most of May, the GBPUSD fell sharply from the key level at 1.32 down to the five month low before the recent consolidation around 1.27 and fall down to 1.25. Earlier this year it was trading strongly above the 1.32 level and looking poised to push through 1.34 and attempt to regain a lot of lost ground from previous years. There are few signs of any support presently and even if it does rally a little, it faces possible further resistance at the 1.27 and 1.32 levels again.
In early March the GBPUSD fell sharply from an eight month high back down below the key level of 1.32 before rallying again and reaching a nine month high shortly afterwards. The sterling enjoyed a very positive January as it has moved from below 1.27 up to a three-month high at the resistance level around 1.32, before a subsequent decline.
Mr Boris Johnson, who was the frontrunner to replace Prime Minister Theresa May, has now become the new British PM. One MP described the appointment as a "summer's day massacre" as the new PM installed his allies and Brexiteers in his new Cabinet. On Wednesday afternoon, Mr Johnson visited the Queen to receive her formal blessing for his ascension to the position. He returned to Number 10 Downing Street where he said, "Do not underestimate this country, " adding that Britons needed to cast off their self-doubt. "The people who bet against Britain are going to lose their shirts because we are going to restore trust in our democracy, and we are going to fulfil the repeated promises of parliament to the people and come out of the EU on October 31, no ifs or buts", he said. The United Kingdom remains divided over its divorce from the EU, and Mr Johnson’s strategy sets the UK up for a showdown with the EU. One of the issues that prevented Ms May from getting a divorce deal through Parliament was the Irish "backstop", which provided a customs union with the EU and Northern Ireland if no better solution was found. "Never mind the backstop. The buck stops here," he said.