GBP/USD – Pound Flat as All Eyes on ElectionThe pound remains in a holding pattern, ahead of the election on Thursday. Polls are predicting a Conservative win, but that could change and cause some stronger movement from GBP/USD.
GBP/USD continues to have a quiet week. Currently, the pair is trading at 1.3111, down 0.11% on the day.
Pound Shrugs off Mixed UK Data
The British economy continues to show signs of weakness, as the October GDP report only served to confirm this. The economy was stagnant, as GDP came in at zero. True, this was an improvement over the past two releases, which showed declines of 0.1%, but analysts had predicted a gain of 0.2%. On the manufacturing front, Manufacturing Production improved to 0.2% in October, after posting back-to-back declines. The reading also edged up above the estimate of 0.1%. This positive release comes at a time when the manufacturing sector is struggling, as a result of weak global demand.
It’s the final day of campaigning ahead of the general election on Thursday. The latest YouGov poll shows the Conservatives with 339 seats, well ahead of Labour, which has 231 seats. This would mean that the Conservatives would form a majority government. Such a scenario would likely send the pound higher, as Prime Minister Johnson could then move ahead to withdraw the U.K. from the European Union. Still, election polls do not go to the voting booths, and if support for the Tories fades, the result could be a hung parliament, which would leave plenty of political uncertainty, nervous investors, and perhaps a weaker pound.
GBP/USD has been range-bound since last week, but that could change, as the pair is making some noise. GBP/USD is putting pressure on support at 1.3100 – we could see this line tested shortly. On the upside, 1.3200 remains vulnerable, as the line was tested on Tuesday, before the pair retracted. Note that this was the first time that this line was tested since March.
Pacific Currencies – Summary
USD/CNY is steady in Wednesday trade. The pair is currently at 7.0375, up 0.09% on the day. The pair continues to hover around 7.0400, which is an immediate resistance line. If the pair can break above this line, it has room to make strong gains, with the next resistance line at 7.0480.
AUD/USD is trading at 0.6819, up 0.12% on the day. Westpac Consumer Sentiment fell by 1.9%, its third decline in four months. This soft release comes on the heels of a de-acceleration in business confidence, which raises concerns about the health of the economy.
NZD/USD has posted slight losses for a fourth straight day. Currently, the pair is trading at 0.6531, down 0.19% on the day. Later in the day, New Zealand releases the Food Price Index and Visitor Arrivals, so we could see some slight movement from the pair later in the day.