Chart of the day - GBPUSD (06.07.2022)

Boris Johnson may have survived a recent confidence vote but the number of MPs who expressed their lack of support for him as Prime Minister was a big signal that problems are likely to drag. A confirmation came yesterday when two top government members - Chancellor of Exchequer Sunak and Health Minister Javid - resigned citing dissatisfaction with leadership of Conservative Party and especially Prime Minister Johnson. A number of lower-rank Conservative Party officials resigned from their posts. Boris Johnson cannot get past scandals he is involved in and party members blame Johnson for poor showing of the party in recent elections, saying that he became a burden for Conservatives. No major crisis is expected now as those that resigned will be replaced and Boris Johnson reportedly intends to stay in the office. However, this is likely the first in a series of events that will show decline in support for Boris Johnson. Theresa May also survived a confidence vote but left the Prime Minister post around half an hour later as support from the party continued to dwindle. And it should be noted that opposition to her inside Conservative Party was not as big as it is to Johnson now.

Taking a look at GBPUSD chart at H1 interval, we can see that the pair tries to catch a breath following a sell-off yesterday. The pair dropped below 1.1932 low from mid-June and traded at the lowest level since March 2020. However, bulls managed to regain some ground and the pair has recovered slightly. A resistance zone in the 1.1975 area, marked with previous price reactions, is being tested at press time. A key resistance can be found in the 1.2085 area, where the upper limit of a local market geometry is located. A break below would signal a short-term trend reversal, at least in theory. Pair may enjoy some elevated volatility today at 7:00 pm BST as FOMC minutes will be released and are likely to impact USD.

Source: xStation5