GBP/USD Daily Forecast – Sterling Brushes off Poll Results and Shows Strength

The latest poll results showed the Tories lead narrowing which caused some immediate pressure in GBP/USD. However, the pair is recovering, suggesting that the markets are not all that concerned.
Jignesh Davda
GBPUSD 4-Hour Chart

Brexit Polls Show Tories Lead Narrowing

With only one day left until the election, the race is getting tight as the latest YouGov poll shows a narrowing of lead the Tories have over Labour.

The report showed that if the election were held now, the Tories would win 339 seats while Labour would take 231 seats. The YouGov MRP poll from roughly two weeks ago showed the Tories winning 359 seats and Labour with 211 seats.

On balance, the report still points to the probabilities of a Conservatives majority. However, with the typical margin of error, a hung Parliament cannot be ruled out.

Prime Minister Johnson needs a majority to push forward on the Brexit deal he negotiated in October. If he is successful in the election, he intends to finalize a deal by the end of next month.

Johnson has also pledged to invest more into NHS, expand the police force, and implement a point-based immigration system.

Technical Analysis

GBP/USD extended higher to briefly trade above 1.3200 yesterday, however, the release of the latest poll results triggered a reversal.

GBPUSD 4-Hour Chart

The pair dropped just over a 100 pips from its high of the day until buyers saw value and stepped in. The pair looks to be fairly well bid in the early day and has erased about half of the decline from yesterday’s high.

I suspect the pair might make one more attempt to print a fresh high ahead of Thursday. Beyond that, it is much more difficult to speculate how the exchange rate will react just ahead of the election and following the results.

Some analysts say the pair has moved too far in pricing in a Tories victory and that the upside is limited. This could very well be the case, but at the same time, I don’t think it is prudent to start looking at bearish position, at least yet.

Bottom Line

  • GBP/USD came under a bit of pressure in late trading yesterday after the latest MRP poll showed the Tories lead narrowing.
  • The pair is recovering in the early day today. The technicals don’t point to a further downside continuation.
Don't miss a thing!
Discover what's moving the markets. Sign up for a daily update delivered to your inbox

Latest Articles

See All

Expand Your Knowledge

See All
The content provided on the website includes general news and publications, our personal analysis and opinions, and contents provided by third parties, which are intended for educational and research purposes only. It does not constitute, and should not be read as, any recommendation or advice to take any action whatsoever, including to make any investment or buy any product. When making any financial decision, you should perform your own due diligence checks, apply your own discretion and consult your competent advisors. The content of the website is not personally directed to you, and we does not take into account your financial situation or needs.The information contained in this website is not necessarily provided in real-time nor is it necessarily accurate. Prices provided herein may be provided by market makers and not by exchanges.Any trading or other financial decision you make shall be at your full responsibility, and you must not rely on any information provided through the website. FX Empire does not provide any warranty regarding any of the information contained in the website, and shall bear no responsibility for any trading losses you might incur as a result of using any information contained in the website.The website may include advertisements and other promotional contents, and FX Empire may receive compensation from third parties in connection with the content. FX Empire does not endorse any third party or recommends using any third party's services, and does not assume responsibility for your use of any such third party's website or services.FX Empire and its employees, officers, subsidiaries and associates, are not liable nor shall they be held liable for any loss or damage resulting from your use of the website or reliance on the information provided on this website.
This website includes information about cryptocurrencies, contracts for difference (CFDs) and other financial instruments, and about brokers, exchanges and other entities trading in such instruments. Both cryptocurrencies and CFDs are complex instruments and come with a high risk of losing money. You should carefully consider whether you understand how these instruments work and whether you can afford to take the high risk of losing your money.FX Empire encourages you to perform your own research before making any investment decision, and to avoid investing in any financial instrument which you do not fully understand how it works and what are the risks involved.