GBP/USD: Awaiting More From Boris Johnson

• GBP/USD has been unimpressed by Boris Johnson's initial moves as PM.
• Johnson's speech in parliament and US data are set to move the currency pair.
• Thursday's technical chart implies an upcoming break out of range.

Boris Johnson has already shocked the political system with his first actions as PM – sacking half of May's cabinet. His first afternoon in the jobs included significant appointments of pro-Brexit supporters such as Dominic Raab as foreign secretary and Jacob Rees-Mogg – head of the European Research Group (ERG) as leader of the House of Commons. 

But while these appointments point to a hard Brexit by October 31st – only 98 days away – some British political analysts are seeing his moves as a preparation for snap elections. Johnson has appointed Dominic Cummings – the controversial mastermind behind the Vote Leave campaign, as a senior advisor. Cummings may organize Johnson's election campaign. Nominating Brexiteers to senior positions may also be part of the strategy – wooing voters of Nigel Farage's Brexit Party back to the Conservative fold. 

The new PM faces the same parliamentary deadlock that his predecessor Theresa May suffered and calling Brits to the polls may be the only way to break the impasse. However, a victory at the ballot box is far from being guaranteed and a pro-Remain coalition may win. Hopes for a softer Brexit help stabilize the pound.

Sterling is also supported by the nomination of Sajid Javid as Chancellor of the Exchequer. The former Home Secretary and investment banker is a staunch supporter of Thatcherite tax cuts and liberalization – something that markets support as well.

All in all, the market reaction has been muted to the political drama due to the uncertainty it caused. Johnson will address parliament later in the day and may spell out his policies in greater detail. In his first speech outside 10 Downing Street, he repeated his pledge to leave the EU by the October 31st deadline but refrained from using strong language such as "do or die" and was short on detail. 

On the other side of the pond, the US releases Durable Goods Orders for June – critical input for Friday's advance GDP publication for the second quarter of the year. Moderate rises are expected. 

See US Durable Goods Orders Preview: Positive omens

GBP/USD Technical Analysis

Pound/dollar is trading within a narrowing wedge or triangle. Technical analysis textbooks suggest that the currency pair will eventually pick a direction and break out with a sharp move. To what direction?

Other indicators are mixed. GBP/USD is trading around the 50 Simple Moving Average on the four-hour chart but below the 100 and 200 SMAs. Downside momentum is waning and the Relative Strength Index (RSI) has stabilized around 50. All in all, the picture is mixed.

Some resistance awaits at 1.2480 which was a swing low in early July. It is followed by 1.2520 which has capped the pair earlier this week. 1.2560 forms part of the downtrend resistance line that began at 1.2580. Next, we find 1.2640.

Support awaits at 1.2440 which supported GBP/USD in July and also earlier this year. Next, we find 1.2420 that was a swing low earlier this week and the 2019 low of 1.2380.

Image sourced from Google