GBP/USD Forecast: Tory Party Wars Weigh On Sterling

• GBP/USD trades little changed on the upside as UK manufacturing rose above expectations.
• The Tory party disputes weigh on Sterling as party leadership is questioned weeks before the key Brexit deal with the European Union.
• 50-day and 100-day moving averages serve as support and resistance for now.

Sterling is trapped within tight ranges against the US Dollar on Monday while dwelling in mid 1.3000s as the Conservative party annual conference is expected to see a bit more support for the UK Prime Minister Theresa May after her leadership was under fire on Sunday.

The day two of the Tory party annual conference is expected to see the UK Finance Minister Hammond supporting Theresa May as he already voiced his concerns about the rival the ex-minister of foreign affairs Boris Johnson, who is the leader of May’s critics.

Meanwhile, the UK manufacturing PMI saw the activity rising more than expected to mark a reading of 53.8 in September after decelerating unexpectedly sharply to 52.6 in August. The end of the third quarter saw a mild improvement in the performance of the UK manufacturing sector consistent with only moderate UK GDP growth, the historical relationship of UK PMI data 
with official ONS data show.

Technically, the GBP/USD is moving in the corrective move lower-to-sidelines after bouncing off the cyclical low of 1.2662 in the middle of August. The Correction saw the uptrend peaking just below 1.3300 and the combination of political uncertainty and the unconvincing macro data saw GBP sliding below 1.3080 representing 23.6% Fibonacci retracement of the downtrend from 2018 high of 1.4377 to 1.2662 this year’s low.  With the key technical oscillators including Momentum and Slow Stochastic pointing downwards, the GBP/USD is now trapped within the tight range of 1.2985 and 1.3135 representing 50-day and 100-day moving average on a daily chart.

GBP/USD daily chart