- GBP/USD is losing traction ahead of UK election results, now sub 1.31 handle.
- Trade tariff announcements expected and market is in anticipation of a bullish headline.
GBP/USD is under pressure as the US dollar picks up a bid and less committed sterling bulls bail-out as the Brits head to the ballot box. Cable is currently trading at 1.3094, that’s down from a high of 1.3229 and the highest levels in quite some time, ( 27th March).
There is a complex mix of fundamentals at play. It is likely that there is less liquidity in sterling today which could make for some wild swings in a pair that is notoriously prone to high volatility, even in the most liquid conditions.
Firstly, the UK elections are the main focus on the domestic front and it’s looking like it’s going to be a photo finish. If there is a victor, it could be by the nose. Whichever way, the general election will be very decisive for Brexit and the pound.
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UK Elections Preview: Five scenarios for the vote and potentially wild GBP/USD reactions
The action first centres around polling stations which are closing at 23:00 CET or 22:00 GMT – exit polls are also due at this time. If history is anything to go by, UK exit polls are reliable and it will be then when we will find out how tight things are of whether there is going to be an outright winner.
On Tuesday, the YouGov’s point estimate showed a Conservative majority, but it was so close that the polling institute could not rule out a hung parliament. The final result will be declared early Friday morning.
Markets await trade tariff announcements
Across the pond, the focus is on trade wars whereby an official announcement is expected to come from US President Donald Trump. Bloomberg reported in recent trade that Trump will meet with his trade advisers at 19:30 GMT. US Trade Representative Robert Lighthizer, White House economic adviser Kudlow and Treasury Secretary Mnuchin are expected to attend the meeting.
The latest rumours are that the US has considered offering a 50% reduction on $360 billion worth of Chinese imports which lifted market spirits, fulling higher benchmarks and provided a boost US Treasury bond yields.
Trump tweeted,
“Getting very close to a big deal with China. They want it, and so do we.”
GBP/USD levels
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