Pound Falls on Political Uncertainty and Weak UK Data, Later Rallies

The British pound today fell to its daily lows in the mid-London session as investors reacted to the release of the weak UK public sector finances data. The GBP/USD currency pair was also weighed down by the political uncertainty in the UK as investors deal with the prospect of a hard Brexit.
The GBP/USD currency pair today fell from an Asian session high of 1.2725 to a low of 1.2642 in the mid-London session before retracing most of its losses.
The currency pair opened today’s session trading with a bearish bias as markets were worried at how close Boris Johnson was to becoming Prime Minister. Following the fifth round of voting in the Conservative Party leadership contest, Jeremy Hunt and Boris Johnson are the top two candidates. The two will now start campaigning to win the support of the 160,000 delegates who will be voting in the final round. The release of the disappointing UK public sector finances for May by the Office for National Statistics also contributed to the pair’s decline.
The cable pulled back from its daily lows in the early American session following the release of the disappointing Markit Flash US manufacturing PMI and the Markit Flash US services PMI by IHS Markit. The upbeat US existing home sales data released shortly afterward by the National Association of Realtors could not stop the pair from rallying higher.
The currency pair’s performance over the upcoming weekend is likely to be driven by geopolitical events.
The GBP/USD currency was trading at 1.2709 as at 16:05 GMT having recovered from a low of 1.2642. The GBP/JPY currency pair was trading at 136.67 having rallied from a low of 135.92.

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