More Fiscal Worry

Cable has shed ~20 pips overnight, trading at ~$1.3820 ahead of London hours, with the broader USD uptick weighing on the pair early this week.

• The headwinds from the fiscal tightening that was outlined last week continue to pressure UK PM Johnson & the ruling Conservative Party in the opinion polls, with threats to their leadership/outright majority clear in the immediate aftermath of the policy move. There are also some worries that UK council tax will have to be hiked to fund the health & social care spending push, which would further crimp the spending ability of lower income households in particular, threatening consumption in the process.
• Elsewhere, it would appear that vaccine passports will not be deployed (at least for now) in the hospitality and nightlife sectors, with formal confirmation of the PM's COVID plan due in the coming days.
• The UK docket is empty on Monday, with the latest round of monthly labour market prints due on Tuesday, followed up by inflation data on Wednesday. Retail sales rounds off the UK's tier 1 data releases for the week on Friday.
• Our technical analyst has noted that the Sep 3 high and bull trigger ($1.3892) remains intact. A break there would turn focus towards key resistance in the form of the July 30 high ($1.3983). Conversely, key short-term support is situated at the September 8 low ($1.3727).
• There are no notable option expiries in the pair to be concerned with come today's 10AM NY cut.