GBP/USD Forecast: Buying big Boris lead and the Golden Cross? Corbyn can still curb gains

  • GBP/USD has advanced amid favorable polls for PM Johnson.
  • Opinion polls, PMIs, and top US data, including the jobs report, promise action.
  • Early December's technical chart is showing a bullish Golden Cross pattern.
  • The FX Poll shows another week at familiar ranges before a downfall later on.

The greatest Tory victory since 1987 – is what a critical poll has shown and supported the pound. However, the race is still wide open, and every political development matters. Data from both sides of the Atlantic will also have its say as December kicks off.

This week in GBP/USD: Conservative landslide?

YouGov's Multilevel regression and post-stratification (MRP) poll has had the most significant impact. The 50,000 strong surveys that correctly foresaw 2017's hung parliament had shown a decisive victory for the Conservatives now. Prime Minister Boris Johnson should be able to the majority of 68 MPs and a lead of 11% over Labour that the survey has reflected until December 12. 

Investors prefer the Tories' more market-friendly policies over the radical ideas of Jeremy Corbyn, Labour's leader. Moreover, a landslide victory would help Johnson in pushing away the hardline Brexiteers and potentially strive for closer trade connections with the EU. 

However, some of the regular polls have resulted in narrower leads for the Conservatives. Also, YouGov's MRP does not reflect the most recent political developments – such as on the hot topic of the National Health Service (NHS and antisemitism). And, they are unable to take into account future events. 

EUR/GBP hit six-month lows, but GBP/USD advanced only modestly – remaining shy of the 1.3013 cycle high. 

On the campaign trail, Corbyn has been under fire for failing to root out antisemitism within the party. He moved quickly to reveal that the government had been in close talks with the US on allegedly opening the NHS to higher drug prices. Both topics have pushed Brexit down the list of priorities. 

Outside the UK election bubble

Sino-American trade talks reached the "final throes," according to President Donald Trump. Chinese officials said that the world's largest economies reached a "consensus" – albeit not on the most sensitive topic of removing tariffs. 

On the other hand, Trump signed the Hong Kong bill into law, angering Chinese authorities. The legislation supports pro-democracy demonstrators, and Beijing sees it as an intervention in its internal affairs. This development pushed markets lower.

Jerome Powell, Chairman of the Federal Reserve, said that he sees the economy as "more than a glass half full" – and he has good reasons for that. Gross Domestic Product has been upgraded to 2.1% in the third quarter, and investment enjoyed a rebound.

Durable Goods Orders leaped in October on all measures. Housing figures were also encouraging and only inflation – according to the Core Personal Consumption Expenditure (Core PCE), disappointed with 1.6%. 

UK events: Polls, debates, and gaffes

The elections remain left, right, and center for sterling. Markets' response to opinion polls may intensify as the clock ticks down toward the December 12 elections. Every statement by high ranking politicians will be closely watched, as well as races from competitive seats. 

Another head to head debate between Johnson and Corbyn is due on December 6. If the PM leaves the studio unscathed, markets may begin pricing in his victory more significantly. However, if Corbyn gains ground in the faceoff – or continues edging closer to the Tories in polls – the pound may plunge.

Markit's Purchasing Managers' Indexes for November are also of interest. Monday features the manufacturing sector, which has been struggling with Brexit uncertainty, is set to remain below 50 – thus reflecting contraction.

Construction PMI is set to remain at lower levels at the 44 handle, while the all-important services sector carries expectations for improvement. Nevertheless, the UK's largest sector will have likely contracted in November. 

Another interesting data point is the British Retail Consortium's Like-for-Like Sales figure, which is predicted to show a drop yearly.

Here is the list of UK events from the FXStreet calendar:

UK macro economic data December 2 6 2019

US events: Trade a lead up the NFP 

US-Sino trade talks remain high on the agenda for markets, despite some fatigue from the neverending saga. The administration plans to slap new tariffs on China on December 15, unless there is an accord. Investors would like to see the removal of previous tariffs. The US Dollar may benefit from safe-haven flows if the negotiations fall apart, and may drop if Washington and Beijing strike a deal.

The first week of December is packed with events. The ISM Manufacturing PMI is forecast to advance but to remain in contraction territory in November as the industrial sector has been lagging behind also in America. The publication serves as the first hint toward the jobs report. 

ADP's Employment Change is forecast to show an increase in private-sector job gains and to shape estimates for Friday's official labor market report. The ISM Non-Manufacturing PMI – and especially its employment component – also serve as hints. 

Economists expect the Non-Farm Payrolls report for November to return to the averages below 200,000, after upbeat statistics in October. Wage growth is set to hold onto the 3% seen in the previous month. The Fed is watching the data ahead of its decision in the following week. 

Here the upcoming top US events this week:

US macro economic forex events December 2 6 2019

GBP/USD Technical Analysis 

The pound/dollar daily chart has continued showing that the currency pair is trading in a moderate downward channel. On the other hand, the 50-day Simple Moving Average has crossed the 200-day SMA, a Golden Cross pattern. Momentum has all but disappeared, and the Relative Strength Index is listless.

All in all, the technical picture is bullish – due to the Golden Cross.

Support awaits at 1.2820, which has provided support several times in September. It is followed by November's low of 1.2760, which also capped cable in the spring. 1.2705 was a swing high on the way up and is also the convergence of the 50 and 200 SMAs.

Resistance awaits at 1.2985, which is November's high and marginally above the late-October peak of 1.2975. Further above, 1.3013 is the six-month high. Next, we find 1.3050, 1.3080, and 1.32.

GBP USD Technical Analysis December 2 6 2019

GBP/USD Sentiment

Markets are cautious about pricing in a victory for Boris Johnson, and this allows for movements to both directions – poll-dependent.

The FX Poll is showing that experts are divided in their forecasts for the upcoming week but see falling prices later on. Average targets are little changed in comparison to last week. It seems that everybody is cautious with opinion polls.

GBP USD FX Poll December 2 6 2019 pound dollar

Related Forecasts

Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.

Analysis feed

Latest Forex Analysis

Editors’ Picks

AUD/USD extends recovery gains to 0.6850 despite China’s coronavirus harming risk-tone

AUD/USD stays on the front-foot while taking rounds to 0.6845 amid the initial Asian session on Friday. The pair recently reacted to the preliminary readings of the Commonwealth Bank (CBA) PMI details for January.


USD/JPY falls to fresh lows, correcting on WHO statement

USD/JPY has tumbled to print fresh lows since failing on the 110 handle, scoring 109.26 and meeting the 200-moving average on the four-hour chart.


FX Fear Trade Gains Traction

Currencies sold off sharply today as the coronavirus virus spreads to new countries. China may be aggressively trying to contain the virus but as we warned in yesterday's note, the respite should be brief as more cases will be reported before it all peaks. 

Read more

Gold: Steady above $1,560 amid fears of China’s coronavirus outbreak

Gold stays modestly changed from Thursday’s close while taking rounds to $1,562.5 during Friday’s Asian session. The bullion recently benefited from the market’s risk-off sentiment amid fears emanating from China and trade headlines. 

Gold News

GBP/USD pressured toward 1.31 amid risk-off mood

GBP/USD is trading around 1.31, off the highs. Coronavirus headlines are sending traders to the safety of the US dollar. Speculation about the next BOE move is rife.


Forex Majors