The pound soared after Boris Johnson's convincing election performance. What's next for the currency? So far, it has been more gains, as the pound has pushed above the 1.34 level.
GBP/USD has posted gains in Monday trade. Currently, the pair is trading at 1.3383, up 0.41% on the day.
Back to Basics
The pound surged on Thursday, after the huge election win by Boris Johnson and his Conservatives. GBP/USD gained as much as 2.5%, before surrendering some of these gains. With the British election behind us, the markets will once again be focusing on economic releases. Later on Monday, the U.K. releases Flash PMI for the manufacturing and services sectors. This is a new event, which means that key sectors of the economy will now have an initial and final PMI release each month. Analysts are projecting that both PMIs will come in just below the 50-level, which separates contraction from expansion.
The Pound
The markets were delighted with the election results, as the pound climbed over 2 percent. The currency briefly rose above the 1.35 line, its highest level since May 2018. As could be expected after such sharp gains in a short period, there was some retracement. The pound climbed 1.5% last week, and has jumped 3.6% so far in December, which is generally a quiet month.
Technical Analysis
After breaking past resistance lines last week, GBP/USD finds itself in unfamiliar territory. There is resistance at 1.3430. Above, the next line is at 1.3500, which was tested late in the week. On the downside, 1.3380 is an immediate support level.
GBP/USD 1-Day Chart
Pacific Currencies – Summary
USD/CNY
USD/CNY has started the weeks with gains. Currently, the pair is trading at 7.0025, up 0.25% on the day. On the fundamentals front, Chinese industrial production and retail sales both beat their forecasts.
The yuan jumped 0.80% on Thursday, after the announcement that the U.S. and China had reached a limited trade agreement in principle. This is a very significant development, and will likely mean the elimination or reduction of tariffs between the two countries.
AUD/USD
AUD/USD is stead at the start of the week. Currently, the pair is trading at 0.6876, up 0.03% on the day. Australian PMIs for manufacturing and services both came in a shade below the 50-level, which separates expansion from contraction.
NZD/USD
NZD/USD has posted slight gains on Monday. Currently, the pair is trading at 0.6598, up 0.11%. Later in the day, New Zealand releases Westpac Consumer Sentiment. The indicator has slowed in each of the past three releases, so investors will be hoping an end to the downturn.
Kenny is an experienced market analyst, with a focus on fundamental analysis. Kenny has over 15 years of experience across a broad range of markets and assets –forex, indices and commodities.
