GBP/USD Forecast: Tory lead in UK election polls support prospects for additional gains

  • The incoming UK opinion polls have been showing a majority for the Conservatives.
  • The USD suffered another round of selloff amid a further escalation in trade tensions.
  • GBP/USD bulls consolidate gains near 1.30 mark ahead of UK/US macro releases.

The British pound strengthened on Tuesday and lifted the GBP/USD pair to its highest levels since October 21 amid optimism that the ruling Conservatives will secure a majority at the upcoming general election on December 12. The latest survey conducted by Kantar showed a lead of 12-percentage point for the UK Prime Minister Boris Johnson’s Conservative Party, while another from ICM has the Conservative margin over the Labour party at 7 points. Investors prefer a Conservative majority, which is needed for the passage of Johnson's Brexit pact with the European Union and enact market-friendly policies.

GBP remains supported by UK political optimism

The pair rallied back to the key 1.30 psychological mark and was further supported by a fresh wave of US dollar selling pressure, especially after the US President Donald Trump indicated that a trade deal with China may not come until after the 2020 US presidential election. Apart from this, the US Congress on Tuesday overwhelmingly approved a bill condemning China’s mass detention of ethnic Muslims, and called for sanctions against some officials responsible. This comes after Trump last week signed a bill supporting Hong Kong’s pro-democracy protesters, which coupled with China's harsh reaction and warning to retaliate could further escalated tensions between the world's two largest economies.

The pair finally ended the day just a few pips off session tops and now seems to have entered a bullish consolidation phase, oscillating in a narrow trading band through the Asian session on Wednesday. Moving ahead, market participants now look forward to the release of UK Services PMI for some impetus. Later during the early North-American session, the US macro data – ADP report on private-sector employment and ISM Non-Manufacturing PMI – might further influence the USD price dynamics and contribute towards producing some meaningful trading opportunities.

Short-term technical outlook

From a technical perspective, the pair on Tuesday finally broke through a resistance marked by the top end of over six-week-old descending trend-channel. Hence, some follow-through buying above October monthly swing highs has the potential to lift the pair further towards an intermediate resistance near the 1.3045-50 region en-route the 1.3100 round-figure mark.

On the flip side, the mentioned resistance breakpoint, around mid-1.2900s, now seems to protect the immediate downside, below which the pair could slide back towards retesting the 1.2900 handle. Failure to defend the mentioned support levels might turn the pair vulnerable and accelerate the slide further towards the 1.2830-25 horizontal support ahead of the 1.2800 round-figure mark. The downward momentum could further get extended towards challenging the trend-channel support, near the mid-1.2700s.


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

FXStreet Trading Signals now available!

Access to real-time signals, community and guidance now!

Latest Analysis

Latest Forex Analysis

Editors’ Picks

EUR/USD bounces after upbeat COVID-19 cure news

EUR/USD is trading above 1.13, rebounding from the lows. Gilead reported that its drug Remdesevir substantially reduces mortality among COVID-19 patients. The news boosted stocks and weighed on the dollar. US coronavirus statistics are due out.


GBP/USD recaptures 1.26 as the market mood improves

GBP/USD is trading above 1.26 as the market mood improves and the safe-haven dollar retreats. Investors are shrugging off Brexit concerns and focusing on hopes to cure coronavirus. US COVID-19 statistics are due out.


XAU/USD consolidates daily gains above $1,800

After advancing to its highest level since September of 2011 at $1,818 on Wednesday, the XAU/USD pair staged a correction and briefly dropped below $1,800 on Thursday.

Gold News

Cryptocurrencies: War for dominance hit the bedrock of the market

Bitcoin tried to regain market share and activated sales in the Altcoin segment. BTC/USD, ETH/USD and XRP/USD are looking for supports and a rebound to push them to new elative highs. The current compression on the XRP/USD chart could trigger an exploding movement.

Read more

WTI once again breaks $40 per barrel after trading lower in early EU trade

There has been quite the bounce in WTI since the EU session after some strong selling pressure during Thursday and overnight. Once again on Friday's session, the price has taken the USD 40 per barrel handle. 

Oil News

Forex Majors