GBP/USD cheers December election polls, USD weakness with eyes on Brexit

With the receding uncertainty surrounding British politics, be it Brexit or December election, GBP/USD takes the bids to 1.2930 while heading into the London open on Thursday.

While the European Union’s (EU) three-month Brexit extension set the tone of the Cable’s latest recovery, increasing odds of the December election and public support to the United Kingdom’s (UK) Prime Minister (PM) Boris Johnson seems to help the pair recently. A recent poll by the UK’s Daily Mail suggests that the Tory leader is ahead of the opposition Labour party head Jeremy Corbyn.

Adding to the upside could be the exit of Nigel Farage’s Brexit party from most polls, which in turn is expected to support Tories during the December month election. Furthermore, the market’s reaction to the United States (US) Federal Reserve’s (Fed) third consecutive rate cut and anticipation of further price pressure have been weighing on the US Dollar (USD) and providing an additional upside to the quote.

On the trade front, the US initial pleased Chinese diplomats by allowing them to renew Iran sanction waivers but the Secretary of State Mike Pompeo renewed uncertainty after blaming China’s ruling party took advantage of the US goodwill. In return, China’s Commerce Ministry shares further guidelines of the trade talks, which will be held via a telephone call between the diplomats, while confirming no change in plan for negotiations.

It’s worth mentioning that the risk-tone has been sluggish with the US 10-year Treasury yields staying below 1.80% while Asian stocks cheering the Fed’s dovish rate cut.

Given the absence of British data, traders will keep following the UK political headlines concerning Brexit and the Parliaments’ drama over the December election, together with US-China trade story, for fresh impulse. However, major attention will be on Friday’s employment data from the US as the Fed recently repeated its optimism surrounding the job markets.

Technical Analysis

The Cable is on its way towards 1.3000 round-figure while a sustained break beyond the monthly top of 1.3013 will be the key to propel prices towards 1.3100 and May’s high around 1.3180. On the downside, a three-week-old rising trend line at 1.2890 and 21-day Exponential Moving Average (EMA) level of 1.2740 holds the key to pair’s further declines in the direction to September month high of 1.2583.