- GBP/USD suffers a sharp spike to the downside to trade -0.10% at the start of the week.
- Latest UK polls continue to favour a Tory victory on the whole.
- The week ahead looks to the US main event in the US nonfarm payrolls.
GBP/USD is currently trading at 1.2915 within a narrow range of between 1.29107 and 1.2918 at the start of the week following a series of UK election polls which do little to sway a Tory leading bias.
GBP has been firmer of late with the Brexit Party promising not to stand against the Tories in constituencies where there is a sitting Tory MP, underpinning the likelihood of a Tory majority after the General Election later this month which diminishes the immediate threat of a no-deal Brexit.
Traders looking for an outcome in the elections before switching focus to trade negotiations
However, over the weekend, a slight weight on the pound comes with the conflicting polls which had the Observer give the Tories a 15-point lead over Labour, stating that the gap has narrowed by four points since a week ago. A Savanta ComRes survey for The Sunday Telegraph put the Conservatives on 43 per cent, as a two-point rise since early last week. Indeed, investors are now waiting for the election result but markets will soon switch to weigh the risks of negotiations of agreements between the UK and the EU which could cap any immediate upside in the pound on a Tory victory.
Nonfarm payrolls are the key event for the week
Meanwhile, the week ahead looks to the US main event in the US nonfarm payrolls jobs report. "We expect payrolls to increase by 200k in November, following the above-consensus 128k October print.," analysts at TD Securities explained.
"Jobs in the goods sector should have rebounded by 50k following last month's large decline due to the GM strike. The household survey should show the unemployment rate ticked down to 3.5%; while we expect wages to rise 0.3% MoM, leaving the annual rate unchanged at 3.0% YoY"
– the analysts detailed.
From a technical perspective, GBP/USD continues to range trade between its October high at 1.3013and the current November low at 1.2768 as noted by analysts at Commerzbank:
"Directly above 1.3013 we have the 200-week ma at 1.3109, the 50% retracement of the move downfrom 2018 at 1.3167, the 5 year downtrend at 1.3170 and the 1.3187May high and this is tough resistance and we look for the market to failhere.Failure at 1.2768 would probably see a slide to the 200 day ma at1.2701. This guards the 1.2582 September high. Below 1.2582 lies the1.2511 uptrend line. It guards 1.2196/94."
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