British Pound: USD/GBP (GBP=X) polls predicted there would be a Conservative majority following the 12th December election

British Pound: USD/GBP (GBP=X) polls predicted there would be a Conservative majority following the 12th December election

The Pound Sterling to US Dollar (GBP/USD) exchange rate rose at the start of the week, as polls predicted there would be a Conservative majority following the 12th December election.

However, the pairing retreated on Tuesday as reports revealed the US and China held a phone call in attempts to hammer out a ‘phase one’ trade deal.

The Dollar edged up as China’s commerce ministry revealed both sides agreed to maintain communication and during the call officials discussed ‘core issues of concern’.

Meanwhile, the pairing continued to slide as the Pound was hit by a fresh wave of election pessimism after polls revealed the Conservative’s lead against opposition parties was narrowing.

Added to this, the Dollar was buoyed by comments from President Donald Trump announced Washington and Beijing were in the ‘final throes’ of talks to reach a trade deal.

However, further data showed that US consumer confidence slumped for the fourth consecutive month in November.

Reports showed tensions between the US and China increased as President Trump formally endorsed the anti-government protestors in Hong Kong. Signing of legislation despite China’s insistence not to caused its foreign ministry to respond and state that any US interference in Hong Kong was ‘doomed to fail’.

A 68 seat majority for current Prime Minister Boris Johnson and a grim outlook for Jeremy Corbyn’s Labour, falling back to 211 seats provided Sterling with an upswing of support.

Meanwhile, the GBPUSD rate was left largely flat on Thursday as US markets closed for Thanksgiving.

At the end of the week, the GBP/USD exchange rate was left muted as data revealed UK consumer confidence remained stuck at a six-year low in November.

Will Election Optimism Buoy Sterling (GBP) Exchange Rates?

Looking to the start of the week, Sterling (GBP) could suffer losses against the US Dollar (USD) following the release of Markit’s UK manufacturing PMI.

If data shows the UK’s final PMI reading for November has fallen further into contraction than anticipated, Pound sentiment is likely to fall.

On Tuesday December 3rd, GBP could edge down against the dollar following the British Retail Consortium’s like-for-like retail sales. If sales slump further than expected in November, the pairing could fall.

Meanwhile, on Wednesday December 4 Pound Sterling could suffer further losses following the release of the highly-anticipated UK services PMI.

If service sector growth contracts at a faster rate than expected, GBP is likely to fall.

The Pound exchange rates are forecast to remain under pressure this week as the country approaches the UK general election on 12th December.

The Pound-to-Dollar (GBP/USD) exchange rate could edge up at the end of the week if reports continue to suggest Prime Minister Boris Johnson is likely to secure a majority in the election.

The British currency has been buoyed by any signs that the Torys would secure a majority in the UK General Election on December 12 as markets see this leads to some certainty surrounding Brexit and a lowering of odds of a no-deal Brexit.

However, as analysts at Nordea point out in their latest Election-Brexit prediction piece, a no-deal Brexit has potentially just been postponed until the end of 2020 as the UK PM ruled out extending the transition period.

US Dollar (USD) Exchange Rates to Rise as Wage Growth and Non-Farm Payrolls Impress

Looking ahead to Monday, the US Dollar (USD) could be left flat against the Pound (GBP) if both US and UK manufacturing data disappoints.

If the US ISM manufacturing PMI remains in contraction territory in November for the fourth consecutive month, the Dollar will slump.

The ‘Greenback’ could fall further if Wednesday’s ISM non-manufacturing reveals slower than expected growth in the sector.

Meanwhile, any reports revealing progress between the US and China could provide USD with an upswing of support if a path to signing a ‘phase one’ trade deal can be seen.

The US Dollar is likely to remain under pressure at the end of the week as November’s non-farm payrolls approach.

If the number of jobs created increases by more than expected and average hourly earnings rise in line with expectations, the Pound US Dollar (GBP/USD) exchange rate is likely to slide.

Technical Indicators

Overall, the bias in prices is: Upwards.

The projected upper bound is: 1.31.

The projected lower bound is: 1.27.

The projected closing price is: 1.29.

Candlesticks

A black body occurred (because prices closed lower than they opened).
During the past 10 bars, there have been 3 white candles and 6 black candles for a net of 3 black candles. During the past 50 bars, there have been 24 white candles and 24 black candles.

A spinning top occurred (a spinning top is a candle with a small real body). Spinning tops identify a session in which there is little price action (as defined by the difference between the open and the close). During a rally or near new highs, a spinning top can be a sign that prices are losing momentum and the bulls may be in trouble.

Momentum Indicators

Momentum is a general term used to describe the speed at which prices move over a given time period. Generally, changes in momentum tend to lead to changes in prices. This expert shows the current values of four popular momentum indicators.

Stochastic Oscillator

One method of interpreting the Stochastic Oscillator is looking for overbought areas (above 80) and oversold areas (below 20). The Stochastic Oscillator is 75.3974. This is not an overbought or oversold reading. The last signal was a sell 9 period(s) ago.

Relative Strength Index (RSI)

The RSI shows overbought (above 70) and oversold (below 30) areas. The current value of the RSI is 56.42. This is not a topping or bottoming area. A buy or sell signal is generated when the RSI moves out of an overbought/oversold area. The last signal was a sell 29 period(s) ago.

Commodity Channel Index (CCI)

The CCI shows overbought (above 100) and oversold (below -100) areas. The current value of the CCI is 38. This is not a topping or bottoming area. The last signal was a sell 9 period(s) ago.

MACD

The Moving Average Convergence/Divergence indicator (MACD) gives signals when it crosses its 9 period signal line. The last signal was a sell 24 period(s) ago.

Rex Takasugi – TD Profile

FOREX GBP= closed down -0.002 at 1.291. Volume was 95% below average (consolidating) and Bollinger Bands were 63% narrower than normal.

Open     High      Low     Close     Volume___
1.292 1.292 1.290 1.291 5,650
Technical Outlook 
Short Term: Neutral
Intermediate Term: Bearish
Long Term: Bullish
Moving Averages: 10-period     50-period     200-period
Close: 1.29 1.27 1.27
Volatility: 6 10 10
Volume: 91,481 104,486 131,361

Short-term traders should pay closer attention to buy/sell arrows while intermediate/long-term traders should place greater emphasis on the Bullish or Bearish trend reflected in the lower ribbon.

Summary

FOREX GBP= is currently 1.7% above its 200-period moving average and is in an downward trend. Volatility is relatively normal as compared to the average volatility over the last 10 periods. Our volume indicators reflect volume flowing into and out of GBP= at a relatively equal pace (neutral). Our trend forecasting oscillators are currently bearish on GBP= and have had this outlook for the last 5 periods.

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