Drama Unfolds As We Move One Day Closer To Election Day

10 december 2019 — 4 min read

Drama unfolds as we move one day closer to the December 12th General Election. The key talking point from yesterday’s political rounds was the criticism Prime Minister Boris Johnson faced over his response to an image of a sick four-year old boy. When presented with the image, Johnson proceeded to pocket the journalist’s phone without immediate acknowledgment. In response, Jeremy Corbyn focused his agenda for the day to be heavily focused on the NHS and more importantly how under-funding is leaving patients at risk. As with previous elections the Labour Party has tried to sow doubts in voters' minds about whether or not the Tories can be trusted with the health service at all. Looking back to 2017 this had a considerable impact on their miraculous comeback to just 2 points off on the day of voting. However, with a poll released yesterday showing a 14-point lead to the Conservatives – signifying a landslide victory - for many speculators it is all too little too late.

To the markets:

GBP/USD

The pair remained mildly flat, trading around 1.3150 ahead of the London open this morning. The pair surged to 7-month highs on yesterday but the weakening lead of the ruling Conservatives over the opposition Labour Party capped the upward move.

The key economic data for today is all out of the UK. With the monthly GDP release today, alongside the releases of the Kingdom’s Trade Balance and Industrial Production, all of which will is released at 9:30am this morning.

The United Kingdom GDP is expected to arrive at +0.1% MoM in October while the Index of Services (3M/3M) for October is seen at +0.5% vs. +0.4% previous. Meanwhile, the manufacturing production, which makes up around 80% of total industrial production, is expected to show MoM no change at 0% in October, improving slightly from a drop of 0.4% recorded in September. The total industrial production is expected to come in at +0.2% MoM in Oct as compared to the previous reading of -0.3%. Separately, the UK goods trade balance will be reported at the same time and is expected to show a deficit of £11.650 billion in Oct vs. £12.541 billion deficit reported in Sept.

Given the positive data out of the UK, it is likely that GBP/USD will continue to see upward moves with the resistance level currently at 1.3225 and support at 1.3079.

GBP/EUR

Similarly against the EUR, the Pound is holding its recent gains as it moves within touching distance of a 31-month high. As with the Dollar, the key economic data released for the pair is all from the UK, with the positive forecast likely to push the pair slightly higher.

However, the key release today will be the final release for the YouGov polls. YouGov are to release their final MRP model of the campaign at 10PM, and foreign exchange markets will likely trade the outcome as it is considered a potential guide to Thursday's result. The Pound rallied sharply following the release of YouGov's first MRP model on Wednesday, November 28th which showed the Conservatives were on course to achieve a majority of 68.

Current support and resistance levels sit at 1.1814 and 1.1959 respectively.

EUR/USD

The Euro is on the defensive, having seen a large loss at the close on Friday. Further, the markets are now convinced that the Federal Reserve would not cut rates before the November 2020 US Presidential Elections. So, the odds appear stacked against the common currency. The Euro buyers, therefore, need the German and Eurozone ZEW surveys for December to blow past expectations.

Current support and resistance levels sit at 1.1027 and 1.1104 respectively.

At the time of writing;

GBPUSD – Trading above 1.31 at 1.3140

GBPEUR – Trading above 1.18 at 1.1867

EURUSD – Trading at 1.1072

The figures are based on the live mid-market rate, correct as of 08:30 GMT on 10/12/2019, and are provided for indicative purposes only. Live mid-market rates are not available to consumers and are for informational purposes only. The rates we quote for money transfer can be selected via the page on our website ‘Live Money Transfer rates’.

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