GBP got support after BoE's report
Bank of England Governor Andrew Bailey delivered a speech today. Let’s discuss what it means for a trader.
The outlook for the GBP
Information is not investment advice
The British pound has been enjoying itself versus the other major currencies during the past weeks. The GBP welcomed the news that Prime Minister Boris Johnson has finally managed to consolidate some power in his hands. Johnson has managed to set the general election for Dec. 12 hoping to get a Parliament that would be more favorable to his Brexit deal. So far this seems to be working: Johnson's Conservative Party has a good lead in the opinion polls.
The most trusted source for public opinion is a resource called ‘YouGov’. The latest YouGov poll released on Nov. 16 shows that the Conservatives have the support of 45% of voters, while the Labour Party is supported by only 29% of the UK population. Other polls confirm the strength of the Conservatives. The most important thing is that, as time goes by, the Conservative Party gets further and further ahead of its main competitor. In addition, the Brexit party announced last week that it wouldn’t stand in 317 seats won by the Conservatives in 2017.
This situation is positive for the GBP because market players believe that if the Conservatives have a majority in the Parliament (for that they would need a lead of 10 percentage points or more over Labour), they will pass the Brexit deal in time and then start trade negotiations with the European Union. This would mean that the major source of uncertainty will finally be out of the way.
Of course, opinion polls by no means guarantee the results of the election, so one needs to be careful about the pound’s advance ahead of the event. The major risk for the GBP is that the polls start to narrow: in this case, we’ll see a bearish correction. Still, the market’s perception of things has definitely changed to a more optimistic view. This is reflected in the dynamics of GBP/USD, EUR/GBP, GBP/JPY, and other pairs. Notice that economic releases from the UK don’t affect the GBP much as all attention is focused on the election.
Looking ahead
Boris Johnson and Jeremy Corbyn (Labour) will face each other at the debate on Tuesday evening (Nov. 19, 22:00 MT time). The event may influence opinion polls, so take it into account while trading.
Technical levels
GBP/USD seems aimed at the psychological level at 1.30 after it rose above the October-November resistance line. The next obstacles will be at 1.3065 and 1.3115 (100- and 200-week MAs).
EUR/GBP closed last week at the lowest levels since the start of May an is vulnerable for a slide to 0.8490/70 (May/March lows). The speech of the new ECB President Lagarde and the euro area’s PMIs on Friday will also influence the pair.
Elizabeth Belugina
Similar
NZD surged to highs of 2019
The New Zealand dollar is rising for the sixth straight day, outperforming its major peers. What is the reason? Let’s find out!
Goldman Sachs forecasts oil deficit
Oil keeps rallying for the fourth day in a row after Goldman Sachs claimed that the oil market is in deficit and also because of the recent storm in the Gulf of Mexico, which led to the sharp decline of oil production. It is the best week for oil since June!
Popular
USD/JPY Tries to Stay Below the 100-hour MA
The dollar index was up late Tuesday afternoon in Asia, extending the 0.8% gain in the previous session, when COVID-19 fears and worries over the US Congress’ stimulus impasse drove a selloff across other assets.
GBP got support after BoE's report
Bank of England Governor Andrew Bailey delivered a speech today. Let’s discuss what it means for a trader.
Fed Chair Powell Testifies
Gold has started a remarkable downside correction and stands on the key 23.6% retracement area after a failure to hold the 38.2% retracement area.
Choose your payment system
