GBP/USD stops cheering Tory lead in UK election poll, eyes on British Services PMI

Following its run-up to the six-week top, GBP/USD takes rounds to 1.3000 while heading into the London open on Wednesday. The quote rallied to the multi-week high on Tuesday after recent polls raised odds of the ruling Conservatives Party’s victory in December election. Traders are now gearing up for the key United Kingdom (UK) data that contributes majorly to the GDP.

In contrast to the early-week polls that showed a receding lead of the Tories over the opposition Labour Party, the recent survey from YouGov and Kantar signal increased fame of the Conservatives. Numbers from Kantar portray point rise in support for Prime Minister Boris Johnson’s Conservatives to 44% and no change in 32% favor for the Labour Party. Further, YouGov shows 42% support for Tories versus 33% for the Labour, which in turn signal a nine-point lead by the Prime Minister (PM) Boris Johnson-led party.

The United States (US) President Donald Trump was in the spotlight while attending North Atlantic Treaty Organization (NATO) summit in London. While President Trump stayed away from directly promoting his friend Johnson for the UK leadership, the Independent quoted him saying that Boris Johnson will do ‘a good job’ if elected. Further, the US leader’s denial of speculations that the US is buying the UK National Healthcare System (NHS) might also have pleased the Tory supporters.

Elsewhere, odds of the US-China phase-one trade deal are getting thinner day by day. The US President recently signaled the deal can wait till late-2020 while the US House announced sanctions on the senior Chinese diplomats. On the other hand, Chinese side keeps the head high and contributed to dragging the market’s risk tone. Additionally, the Independent’s news that Hundreds of protesters march to Buckingham Palace over the US President Trump NHS fears might have exerted additional pressure on the trade sentiment. As a result, stocks in Asia and S&P 500 Futures keep the red.

Moving on, the traders are gearing up for the key UK Services Purchasing Managers’ Index (PMI), expected to remain unchanged at 48.6, coupled with the US Markit Services PMI and ISM Non-Manufacturing PMI. While the US Markit data could reprint 51.6 figure, it’s ISM counterpart might decline to 54.5 from 54.7. Furthermore, the US ADP Employment Change, forecast 140K versus 125K prior, can offer additional burden on market watchers.

Other than the economic calendar, trade/political headlines could also offer increased market volatility and are worth observing.

Technical Analysis

October month top near 1.3015 and May 10 high near 1.3050 hold the key to pair’s rise towards May month peak around 1.3180. On the downside, November month high near 1.2986 and November 28 top near 1.2950 seems to be immediate supports to watch during the pair’s pullback.