British Pound (GBP): A Potentially Volatile Cocktail of Heavyweight Data and Politics

[MongiIG]

GBP/USD Price, Chart, and Analysis

• UK data will steer Sterling in the short term.
• ‘Operation Save Big Dog’ plans revealed.

Keep up to date with all market-moving data releases and events by using the DailyFX Calendar

A slow start to the week with the US celebrating Martin Luther King Day will likely pick up for cable traders with a host of heavyweight economic data releases set to be released. On Tuesday the latest jobs and earnings data (November), Wednesday sees the release of the December inflation numbers, while at the end of the week the latest look at the UK high street with December retail sales report. All three releases have the potential to move Sterling and should be closely watched.

UK Prime Minister is set for a potentially tricky week ahead with the publication of the findings of senior civil servant Sue Gray’s ‘partygate’ investigation. UK PM Boris Johnson is under increasing pressure to resign from some within his own party, while others are rallying around the PM and giving him public statements of support in a coordinated effort called ‘Operation Save Big Dog’. While details remain sketchy, it seems likely that some senior civil servants will lose their jobs over the lockdown-breaking parties in an attempt to shore up support for the PM.

GBP/USD broke through the medium-term downtrend last week with relative ease and traded at a fresh multi-week high of 1.3750 last Thursday before fading lower. While Sterling is currently strong, a lot of the recent moves in cable have been prompted by the changes in value of the US dollar. Going into the year, market positioning for the US dollar was heavily long on increased expectations of monetary tightening in the US grew. The greenback has weakened of late however as some of these long bets were unwound, allowing cable to press further ahead. The dollar looks to have a level of support and GBPUSD is now likely to be moved by UK data and politics rather than by US monetary policy expectations. Cable has decent support all the way back down to 1.3570, while the late-October triple high at 1.3835 may prove a difficult hurdle to overcome in the short term.

GBP/USD DAILY PRICE CHART – JANUARY 17, 2022

Retail trader data show 40.46% of traders are net-long with the ratio of traders short to long at 1.47 to 1. The number of traders net-long is 8.54% higher than yesterday and 8.88% lower from last week, while the number of traders net-short is 5.11% higher than yesterday and 6.67% higher from last week.

We typically take a contrarian view to crowd sentiment, and the fact traders are net-short suggests GBP/USD prices may continue to rise. Positioning is less net-short than yesterday but more net-short from last week. The combination of current sentiment and recent changes gives us a further mixed GBP/USD trading bias.

 

What is your view on GBP/USD – bullish or bearish?

 

 

Jan 17, 2022 |   Nick Cawley, Strategist. DailyFX

[MongiIG]

LONDON — U.K. Prime Minister Boris Johnson’s position is looking increasingly vulnerable as more reports emerge of parties and gatherings in Downing Street during periods of Covid-19 lockdowns and restrictions.

Kier Starmer, the leader of the opposition Labour Party, accused Johnson of breaking Covid laws amid numerous allegations of parties and gatherings that were held by government staff, with some attended by Johnson, during lockdown.

In the last few days more reports of parties have emerged, with Downing Street apologizing to Queen Elizabeth after it has emerged that two parties took place on the eve of Prince Phillip’s funeral in April 2021, in which it’s alleged that a staff member was sent out to buy a “suitcase of wine.”

Speaking to the BBC on Sunday, Starmer said Johnson had “lied” about what he called “industrial scale partying” in Downing Street.

“The facts speak for themselves, and the country has made up its mind,” he said, adding it was “blindingly obvious what’s happened.”

“I think he broke the law, I think he’s as good as admitted that he broke the law,” he told the BBC.

Johnson admitted to Parliament last week that he had attended a drinks party at Downing Street, the prime minister’s office and which he lives next door to, during the U.K.’s first Covid lockdown in May 2020 but said he believed it was a “work event.”

Johnson has said that another picture showing him and his wife, as well as 17 Downing Street staff members, drinking wine and eating cheese in No.10′s garden at a separate event in May 2020 showed “people at work.”

A number of lawmakers within Johnson’s Conservative Party have called on the prime minister to resign, saying his position is now untenable as public anger has grown as more reports of parties being held in government buildings have emerged. Others have questioned Johnson’s judgment and the work culture in Downing Street.

 

Boris Johnson’s leadership on a knife-edge amid calls for him to resign over lockdown ‘parties’

Johnson’s closest minister in his Cabinet have remained loyal for now, saying that they will await the conclusions of an investigation being carried out by a senior civil servant, Sue Gray, into whether parties and gatherings took place in various government buildings and broke Covid rules.

The results of that inquiry could be released later this week. Sky News has published a list of the alleged parties here.

Conservative Party Chairman Oliver Dowden reiterated that position on Sunday, commenting to the BBC that “the task for us now is how we address the underlying culture in Downing Street” and that “we need to up our game, and that needs to be addressed, and I know the prime minister is committed to addressing that.” CNBC

 

For more on what Johnson has said