The GBP is being driven by the size of the conservative majority and USD/CAD looks ahead to the Bank of Canada rate meeting
|Don’t forget the UK election will drive the GBP for the next 10 days
Remember, the coming UK General election is what’s driving the GBP right now. On December 12 the UK is having an election in December for the first time in nearly 100 years. The direction of the GBP in the lead up to this election date is being driven by the latest polls .
The GBPUSD has moved closed down to 1.2900 after a flurry of polls out over the weekend which have shown a narrowing lead for the conservative party led by PM Johnson. The widely followed YouGov poll was: Conservatives 43% (unchanged), Labour 34% (+2), Lib Dems (13% unchanged) and Brexit Part 2% (-2), conducted on November 28-29. The basic playbook for the GBPUSD pair is:
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A growing conservative majority = GBP strength
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A narrowing conservative majority= GBP weakness
CAD: BoC in focus for tomorrow
Bank of Canada, 1.75%. Neutral/bullish.
The Bank of Canada had been the only major central bank to not turn explicitly dovish. However, at their latest rate meeting the BoC highlighted their concern over the US-China trade deal as a potential drag on the Canadian economy and the BoC's tone was more dovish. However, last week Governor Poloz was more upbeat about the Canadian economy. This week Canada's September non-farm earnings showed the largest rise in wages since 2014. The Q3 GDP on Friday was as expected at +1.3%, so this is enough positive data that the BoC should stay on hold at the moment With the BoC having enough solid data to maintain rates as they are for the immediate future the market will be waiting to see how Poloz steers future expectations on Wednesday’s meeting. A bullish perspective from Governor Poloz and expect further USDCAD downside.
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