The pound's early week gain against the U.S. dollar may prove fleeting even if British Prime Minister Boris Johnson wins Monday's Tory confidence vote, as the event risk of U.S. inflation data looms large.
Betting odds favour Johnson winning the vote, the result of which is expected soon after 1900 GMT.
If Johnson survives it, his leadership durability may still be questioned, creating political uncertainty that could hamper policy making and the pound. nIfp3LX0Vw
The probability of GBP/USD getting above the weekly tenkan line that capped recent gains, now at 1.2652, will also recede if Friday's U.S. CPI report favors further 50bp Fed rate hikes beyond those already priced in for June and July, after strong payrolls data Friday. nAPN0LIDFZ
Sterling's been underpinned by the 21-day moving average, now at 1.2465, since backing off May's 1.2156-1.26665 rally -- which accompanied rebounding 2-year gilt-Treasury yield spreads.
However, the late May pricing out of a peak Fed rate has ended, along with a pruning of peak BOE hike pricing.
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