FX.co ★ Global macro overview for 05/06/2018

The financial media reported that today is the start of a four-day visit of the British negotiating team in Brussels, where the topics are "future relations, Ireland, divorce cases". There is a field in each topic for the disappointing results and signs of the government's defeat, Prime Minister Theresa May. Speculations are also fueled by recent reports according to which the May government plans to postpone the publication of the next edition of the so-called White Paper, which was supposed to include plans for future relations with the EU. The document is to be released only in July, after the next EU summit on June 28-29. The change of the date is part of the voices of conflict and lack of consensus on key issues in the government itself. Secretary of Brexit Dawid Davis, one of the most ardent supporters of the prime minister, allegedly stated that the postponement is "disappointing". Previously, it was thought that publication of the document before the summit would give time for discussion and consultation of what the government wants to move to Brussels. Perhaps the reason for postponing the publication is important (some things are better negotiated without public intervention), but for now, the whole case is negative for the pound sterling.

But there is some good news from the UK economy today. The UK PMI Services data was released at the level of 54.0, which was better than 52.8 points a month ago and better than the expected reading of 52.9 points. The Composite PMI was also released better than expected at the level of 54.5 points versus the forecast of 53.4 and 53.2 prior.

Let's now take a look at the GBP/USD technical picture at the H1 time frame. The current GBP position is problematic and strongly shaky. Without the help of good data (as today in the case of PMI), the nervousness around Brexit can take the lead and negatively affect the exchange rate. In the meantime, GBP/USD is closed in the range between 1.33-1.34. Breaking out will shift attention to 1.3470 - 1.3790 (high from May 22) or 1.3250 (low from June 1).