GBP/USD: Upside Limited After Corbyn's Major NHS Revelation

FXStreet  |

  • GBP/USD remains pressured amid fears of a hung Parliament.
  • YouGov's MRP poll is high on the agenda for traders.
  • Wednesday's four-hour chart is pointing to the downside.

Boris Johnson has already been in intense talks with the US about raising drug prices for UK patients, according to opposition leader Jeremy Corbyn, with accompanying documents. This fresh revelation from the opposition, using an unredacted 451-page document, may impact the elections. Labour would like to place the National Health Service on top of the agenda and push down Brexit and accusations of antisemitism.

Markets will be focused on the election agenda and also on a substantial poll.

MRP on the mind

Multilevel Regression and Post-stratification (MRP). This mouthful may not only move the pound upon its publication but shape expectations for the elections.

YouGov's "mother of all polls" correctly predicted that then Prime Minister Theresa May would fail to retain the Conservative's majority in 2017. This massive, constituency-level statistical exercise has gained respect and is highly anticipated. It is due to be released at 22:00 GMT (5:00pm EST).

It is essential to note, however, that despite its ability to foresee the general headline of the previous elections, the MRP did not accurately predict the number of seats for every party. The difference between a Tory majority, which markets prefer, and a hung Parliament may come down to a handful of MPs.

In the meantime, normal opinion polls – including from YouGov – have continued showing a narrowing lead for Prime Minister Boris Johnson over Labour's Jeremy Corbyn. The double-digit lead should be sufficient for an absolute majority, but traders have learned to be suspect of surveys.

Racism issues

The opposition party has been edging up despite the antisemitism scandal that has engulfed it. Corbyn has refused to apologize for his unimpressive fight against racism even after Ephraim Mirvis, the Chief Rabbi for Britain's Jewish Orthodox community, accused Corbyn of allowing "poison sanctioned from the top" to take root in the party. The leader came out to defend an artist who painted an antisemitic mural.

The Tories have had similar issues with Islamophobia, especially as Johnson compared Muslim women who wear a burqa to bank robbers and letterboxes. Racism has taken over the agenda from the National Health Service and Brexit.

Trade and US data

Outside the UK, investors are still waiting for a US-China trade deal, which seems close according to recent statements. Trump said he is holding it back.

A substantial amount of US figures are being released today ahead of the Thanksgiving holiday. The US Commerce Department just said that the second estimate of Gross Domestic Product (GDP) increased at a 2.1% annualized rate, up from the 1.9% initially reported.

More recent data related to investment is also eyed. Core measures of Durable Goods Orders rose 0.6% in October, after falling 1.4% in September. The figure was boosted by orders for military aircraft, which rose 18.1%. Excluding defense orders, the October number showed a modest 0.1% increase.

The Federal Reserve's preferred measure of inflation and other figures are also eyed. Overall, pound/dollar will likely move more on UK developments than US events.

GBP/USD Technical Analysis

GBP USD technical analysis November 27 2019

Click to enlarge

Sterling has been attempting to recover from the previous falls but is struggling to rise above the 200 Simple Moving Average on the four-hour chart. GBP/USD continues trading below the 50 and 100 SMAs and momentum remains to the downside.

Support awaits at 1.2820, which has been a low point on Friday and also earlier in November. Further down, 1.2760 is November's low and significant support as well. Lower, 1.2705 and 1.2655 await the pound.

Resistance is at 1.2890, which was a low point last week. Higher above, 1.2915 is the weekly high. It is followed by 1.2970 and 1.2985 where previous peaks in November.


Equities Contributor: FXStreet

Source: Equities News

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