Mild reaction on Johnson’s PM confirmation; bias remains with bears
Cable reacted calmly on widely expected results of vote for Conservative Party leadership and Britain’s Prime Minister positions that Boris Johnson won today.
The pair was around 40 pips from European session high at 1.2481, in immediate reaction after the announcement, maintaining negative tone and signaling that mild correction in European trading might be over.
Fears that the Britain is going towards the divorce without deal rise on comments from rating company Moody’s that risk of no-deal Brexit has increased, the likelihood of a sustainable Brexit compromise is lower than before and that no-deal scenario would be credit negative for the UK, however there is still no majority in the parliament to support such an outcome.
Near-term outlook remains negative but high volatility may cause a lack of clear direction, with fresh signals to depend on headlines, as both scenarios are on the table.
Immediate focus remains on 17 July low at 1.2382, with bearish bias below trendline resistance (1.2522) and only firm break here to sideline bears.
Res: 1.2481; 1.2490; 1.2522; 1.2542
Sup: 1.2417; 1.2400; 1.2382; 1.2365