After a flat start to the week, GBP/USD has edged lower on Tuesday. Currently, the pair is trading at 1.2694, down 0.23% on the day. On the release front, Mark Carney’s testimony on inflation before a parliamentary committee has been cancelled. British CBI Industrial Order Expectations slipped to -10, weaker than the estimate of -6. This marked the lowest score since November, as manufacturing orders continue to decline. In the U.S., existing home sales is projected to climb sharply to 5.35 million.
Brexit has been on the backburner in recent weeks, but the upcoming election for the European Parliament could boost anti-Brexit parties. Key issues in the election, which covers all 28 member EU states, include the economic slowdown, the migrant crisis and the rise in Euroskpeticism. Euro-skeptics increased their representation in parliament from 12% to 25% in the last election, and with the dramatic increase in strength of populist parties, this trend could well continue. The U.K. will participate in the vote, although the country is on its way out of the EU. The Conservatives are expected to have a poor showing, while anti-Brexit parties could make major gains. This could weigh on the British pound which plunged 2.1% last week.
U.S.- China trade tensions continues to simmer, which has boosted the safe-haven U.S. dollar. On Friday, the Trump administration had announced it was imposing trade sanctions on the Chinese telecom giant, a move which sent stock markets reeling on Monday. However, the U.S. Commerce Department has taken a step back, saying that it will provide 3-month exemptions to U.S. companies that sell to Huawei. The tussle over Huawei has exacerbated the trade war between the two economic giants, and risk appetite will remain soft until the sides resume negotiations.