- GBP/USD bulls probe October’s high after gaining over 150 pips the previous day.
- US election updates fail to provide clarity even if Biden leads the tally.
- Fed’s Powell sounds dovish compared to BOE’s Bailey.
- US employment data, election results should be watched carefully.
GBP/USD takes the bids near 1.3155 during the early Friday morning in Asia. In doing so, the Cable rises to the fresh high since October 21 as the US dollar stays offered amid broad market optimism, mainly backed by the US election update. The pair also benefits from the Bank of England’s (BOE) no negative rates and cautious comments from the Federal Reserve Chairman Jerome Powell.
Everything a bull recipe needs…
Be it the increasing odds of Joe Biden’s victory in the US presidential election or the BOE Governor Andrew Bailey’s rejection of the recession fears, not to forget Fed Chair Powell’s economic worries, GBP/USD bulls have all the favorable factors to probe the multi-day high.
The latest updates from the US elections suggest the race is getting tough in Georgia with US President Donald Trump’s lead getting close to below 10,000 votes. This can add a few more numbers to Biden’s 260+ counts, versus 270 required. However, Trump has already challenged multiple states, rejected in Michigan, and hence disturb Democrats’ path in the Senate.
Check live updates for the 2020 US elections here.
The BOE refrained from any interest rate change, as expected, while announcing an additional GBP150 billion of Quantitative Easing (QE). Additionally, Governor Bailey’s clear no to the fears of a double-dip recession also favored the GBP/USD bulls. Elsewhere, British Chancellor Rishi Sunak’s another effort to please the markets, via an extension to the furlough scheme until March, offered an extra boost to the pair’s uptrend.
On the other hand, the Fed also matched market consensus and announced no rate change while Chairman Powell ruled out funding fiscal activities and cited tail risk due to the coronavirus (COVID-19).
Against this backdrop, Wall Street marked another positive day with the S&P 500 inching closer to the record high, nearly 2.0% far. The same dragged the US dollar index (DXY) towards revisiting October’s low.
Moving on, GBP/USD traders will keep eyes on the risk events, mainly emanating from the US elections before the US Nonfarm Payrolls (NFP) numbers for October. Forecasts suggest 600K NFP versus 661K prior, which in turn can add weakness to the greenback.
Read: Nonfarm Payrolls Preview: Encouraging data but little action expected
Technical analysis
Unless successfully crossing the OCtobre peak surrounding 1.3180, odds of the pullback to 1.3100 can’t be ruled out.
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