GBPUSD Fundamental Analysis Ahead of US Iran Tension


GBPUSD struggles near weekly lows. Brexit uncertainty joins the broad USD recovery amid US-Iran tension. Traders are waiting for UK/US data, FOMC minutes and Brexit/political headlines for a boost. Here is the GBPUSD Fundamental Analysis of 03 January, 2020.

03 January, 2020 | AtoZ Markets – The GBPUSD remains modestly changed at 1.3140 while heading towards the London open on Friday. The pair dropped the previous day on broad USD recovery, but it is for fresh clues to extend the downside.

GBPUSD Fundamental Analysis – 03 January, 2020

The US dollar (USD) remains at the forefront, as the year-start increase received a new boost from the US-Iran tension. The greenback is gaining popularity, due to its safe-haven appeal, among traders. It is after the United States killed key Iranian soldiers in airstrikes in Baghdad.

While exhibiting the same movements, the S&P 500 Futures and most of the Asian equities weigh down amid the risk-off mood.

On the other hand, the European Union’s (EU) recently tough stand against the UK PM Boris Johnson’s pre-election pledges increases the chances of the hard-Brexit. Besides, the conservative leader’s close assistant. Dominic Cummings recently called for drastic changes in public services but is widely criticized for the payment caps.

Despite this, the British pound (GBP) seems to be awaiting the final reading of the British construction PMI and other second-tier. It concerns the housing market to continue the previous dynamic. Also, the minutes of the latest FOMC meeting and the US manufacturing PMI will be watched. Besides, concerns about the tough phase-two talks between the United States and China have recently attracted market attention.

Read More: 3 January Free GBP/USD, EUR/USD, XAU/USD, AUD/USD and BTC/USD Trading Signals

Traders Await UK/US Data

The dollar index fell a fraction to 96,770 (DXY). But it remained above recent semi-annual lows around 96,355. The dollar found support overnight after disastrous economic news from Europe, and the United Kingdom weighed on the pound and the euro. Surveys have shown that British industrial production fell in December at the fastest rate since 2012. And the German manufacturing sector stayed deep in contraction.

US Treasury bills and gold rallied after Iraqi militia spokesperson told that two Iranian had been killed in the attack. They were division general Qassem Soleimani and Iraqi militia commander Abu Mahdi al-Muhandis. The Pentagon confirmed the attack, saying that Soleimani was actively developing plans to attack the Americans in Iraq and the Middle East.

The market seemed to agree that oil should jump around $ 2 a barrel. Jeffrey Halley, senior market analyst for Asia Pacific with broker OANDA said:

“We are only on the third day of the new year. And a large dose of geopolitical uncertainty has landed on investors’ desks. I have trouble seeing how an Iranian riposte will not happen. The oil facilities and the tankers were my first thoughts.”

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