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GBP/USD – Pound Soars as Conservatives Cruise to Majority

Boris Johnson has led the Conservatives to a landslide election victory, and the British pound has climbed over 2 percent, as the markets cheered the results. The U.S. and China have reached a trade deal in principle, and the Australian dollar and Chinese yuan responded with sharp gains.
Kenny Fisher

GBP/USD is sharply higher in Friday trade. Currently, the pair is trading at 1.3437, up 2.03% on the day.

Boris Wins Big

Prime Minister Boris Johnson led his Conservative party to a resounding win in the hard-fought British election. Early election results indicated the Tories had won 368 seats, a comfortable majority of the 650 seats in parliament. The Labor party managed to win only 203 seats, the party’s worst showing since 1935.  As one television reporter noted, years of infighting over Brexit had led to ‘Brexhaustion’, and an exasperated electorate gave two thumbs up to the Conservatives’ simple, yet effective slogan of “Get Brexit Done”.

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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. We could see some retracing by GBP/USD after such sharp gains due to profit taking, but for now, it’s euphoria in the markets.

Technical Analysis

GBP/USD posted huge gains late on Thursday, blowing resistance lines out of the water. The pair tested resistance at 1.35 but has retracted. On the downside, there is support at 1.3380.

GBP/USD 4-Hour Chart

 

Pacific Currencies – Summary

USD/CNY

Trade Agreement Sends Yuan Higher

USD/CNY has steadied on Friday, after posting sharp losses on Thursday. The pair has fallen below the 7.000 for the first time since early November. 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 has posted gains for a third straight day, and is up 1.2% this week. Currently, the pair is trading at 0.6922, up 0.19% on the day. The announcement that the U.S. and China have reached a trade deal in principle has helped boost the Aussie.

NZD/USD

NZD/USD is unchanged on Friday, trading at 0.6619. The pair has gained 0.8% this week and is currently at its highest level since late July.

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