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GBP/USD rebounded from a key area of support in the upper 1.2400s to the mid 1.2500s on Monday.Sterling is outperforming despite UK PM Johnson’s looming no-confidence vote that could unseat his premiership.

The week will otherwise be quiet until Friday’s US CPI data release.Despite UK PM Boris Johnson’s looming confidence vote later on Monday evening UK time, it’s all cheer for sterling at the start of the new week, with the currency outperforming its G10 peers as UK markets reopen following a long week of celebrations for the Queen’s Platinum Jubilee. Yield differentials appear to be one factor behind sterling’s outperformance, with UK 2-year yields last up nearly 7 bps on the day as UK bond markets reopen for the first time since last Wednesday.

GBP/USD was last trading with gains of about 0.5% on the day close to the 1.2550 level, having rebounded from a strong area of support in the 1.2460-80 region (last week’s lows and the 21-Day Moving Average). Analysts are framing a potential defeat for Johnson later in the day as a potential positive, or at least not a negative, for sterling, given the PM’s waning authority in recent months amid the ongoing “partygate” scandal where the PM and his staff incurred a number of policy fines over breaching lockdown rules.  

Aside from UK political machinations, things are set to be quiet for GBP/USD traders until Friday, when US Consumer Price Inflation data for May is set for release. Until then, there is a chance FX markets remain locked within recent ranges, suggesting GBP/USD remaining between the mid-1.2400s to upper 1.2600s. However, should Friday’s US inflation data then point to a further easing of price pressures, some analysts expect USD weakness to come back to the fore.

GBP/USD retreats below 1.2550 ahead of UK no-confidence vote

GBP/USD trades around 1.2530 as the focus shifts to inflation. Members of the UK Parliament will take part in a vote of no-confidence against Prime Minister Boris Johnson later in the day. Meanwhile, US stocks post strong gains after the opening bell.

GBP/USD News 

EUR/USD pierces 1.0700 as dollar recovers

EUR/USD stays on the back foot in the second half of the day and trades below 1.0700 as inflation-related concerns undermine the market’s mood. The dollar stays resilient against its rivals supported by the 10-year Treasury yield surging above 3%.

EUR/USD News 

Gold retreats below $1,850 as US yields push higher

Gold came under renewed bearish pressure in the second half of the day and fell below $1,850. The benchmark 10-year US Treasury bond yield continues to push higher and was last seen gaining more than 2% above 3%, weighing on XAU/USD.