- GBP/USD has shot up as Nigel Farage announced he will not compete with Conservatives.
- UK GDP and trade headlines may also move the pound.
- Monday's four-hour chart has turned bullish for the currency pair.
The man that was one of the architects of Brexit has been stirring sterling one again – this time to the upside. Nigel Farage, leader of the Brexit Party, has announced he will abandon his plans to field candidates in all of Great Britain. His new party refrains from competing with incumbent Conservative MPs – allowing them a smoother path to reelection. The right-wing outfit will still compete against Labour and other parties.
Farage's surprising move – a U-turn from a pledge he made only two weeks ago – has sent sterling higher. GBP/USD is edging closer to 1.29 after struggling with 1.28 beforehand.
Markets now see higher chances that Prime Minister Boris Johnson wins an absolute majority – thus ratifying his Brexit accord and enacting market-friendly policies. The "Leave Alliance" lowers the odds of seeing Jeremy Corbyn – the hard-left leader of the Labour Party – entering Downing Street.
Weak UK growth, trade concerns
The political developments come only three days before the parties must submit their candidates' lists – and wipes out the pessimism that has engulfed GBPUSD. The pound was on the back foot after UK Gross Domestic Product third-quarter growth came out at 0.3% quarterly and 1% yearly – below expectations. While Britain enjoyed faster expansion than the euro-zone, the meager figures are showing that Brexit uncertainty is taking its toll.
On the trade front, President Donald Trump has said that reports that the US and China would remove tariffs are incorrect. He also bashed China, saying that the world's second-largest economy's supply chain is "broken like an egg." His words – accompanied by silence from Beijing – have been weighing on markets.
Eric Rosengren, President fo the Boston branch of the Federal Reserve, will speak later in the day. However, GBP/USD is mostly moving in response to UK developments, extending the same behavior observed last week.
GBP/USD Technical Analysis – higher levels eyed
On the four-hour chart, GBP/USD has broken above the 50 and 100 Simple Moving Averages it lost earlier, and momentum is about to turn positive. It has also recaptured the uptrend support line it lost earlier.
Sterling faces resistance at 1.2920, which worked as a separator of ranges last week. Next, 1.2950 also worked as resistance in early November. It is followed by the late-October peak of 1.2980. The cycle high of 1.3013 towers over the pound.
Support awaits GBP/USD at 1.2785, which was a low point in mid-October. It is followed by 1.2765, seen late last week. 1.2705 and 1.2660 await below.
More GBP/USD Forecast: Four Top-tier figures to determine direction after BOE blow, election mess
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. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended Content
Editors’ Picks
AUD/USD posts gain, yet dive below 0.6500 amid Aussie CPI, ahead of US GDP
The Aussie Dollar finished Wednesday’s session with decent gains of 0.15% against the US Dollar, yet it retreated from weekly highs of 0.6529, which it hit after a hotter-than-expected inflation report. As the Asian session begins, the AUD/USD trades around 0.6495.
USD/JPY finds its highest bids since 1990, approaches 156.00
USD/JPY broke into its highest chart territory since June of 1990 on Wednesday, peaking near 155.40 for the first time in 34 years as the Japanese Yen continues to tumble across the broad FX market.
Gold stays firm amid higher US yields as traders await US GDP data
Gold recovers from recent losses, buoyed by market interest despite a stronger US Dollar and higher US Treasury yields. De-escalation of Middle East tensions contributed to increased market stability, denting the appetite for Gold buying.
Ethereum suffers slight pullback, Hong Kong spot ETH ETFs to begin trading on April 30
Ethereum suffered a brief decline on Wednesday afternoon despite increased accumulation from whales. This follows Ethereum restaking protocol Renzo restaked ETH crashing from its 1:1 peg with ETH and increased activities surrounding spot Ethereum ETFs.
Dow Jones Industrial Average hesitates on Wednesday as markets wait for key US data
The DJIA stumbled on Wednesday, falling from recent highs near 38,550.00 as investors ease off of Tuesday’s risk appetite. The index recovered as US data continues to vex financial markets that remain overwhelmingly focused on rate cuts from the US Fed.