GBP/USD: Trade/political headlines fail to impress momentum traders below 1.2900
|- GBP/USD remains on the back foot amid broad USD strength.
- Stories concerning the US-China trade talks, Hong Kong trouble traders.
- The UK PM Boris Johnson’s manifesto fails to impress business leaders.
The Tory manifesto fails to receive a warm welcome from the investors’ fraternity as the GBP/USD seesaws around 1.2850 while heading into the London open on Monday.
Following upbeat manifestos and “contracts with the British people” by the opposition parties, the ruling Conservative Party announced its manifesto during this weekend. The same promised to cut spending to £2.9 billion a year against the opposition Labour Party’s £82.9 billion and £62.9 billion promised by the Liberal Democrats (Lib Dems). Though, statistical doubts over how the Tories will manage to staff 50,000 nurses under National Healthcare System (NHS) and manage to offer a no tax hike initially dimmed the market’s favor for the Prime Minister (PM) Boris Johnson.
The Guardian spots Adam Marshall, director-general of the British Chambers of Commerce (BCC) and Josh Hardie, deputy director-general at the Confederation of British Industry (CBI) while conveying a lack of optimism surrounding the Tory manifesto among the industry players. While Adam Marshall insisted the need for “more substantial measures to boost growth, enterprise and investment”, Josh Hardie warned that the outlook for the economy was clouded by concerns over the UK crashing out of the EU following Brexit negotiations next year.
The opposition Labour party terms the manifesto as “billionaires’ manifesto” and also criticized the party’s proposal for NHS. It should also be noted that the Independent mentions Lib Dems warning that the UK will become the US President Trump's poodle if Boris Johnson wins election.
Elsewhere, China’s readiness to take tough measures against copyright infringement and the United States (US) President Donald Trump’s trade positive statement joined the lead of pro-Democracy candidates in the Hong Kong election. Though, doubts over phase two negotiations between the US and China, coupled with challenges to China’s “One country, two systems, question the bulls.
As a result, equities in Asia register cautious optimism while the US treasury yields seesaw around 1.78%.
While no major data/event is up for publishing from the UK, except November month CPI survey details, markets will keep eyes over the US second-tier activity numbers for fresh direction. It should also be noted that trade/political headlines will keep the driver’s seat.
Technical Analysis
While monthly low close to 1.2770 limits the pair’s near-term declines, any upside below 1.3000 seems less likely to gain major market attention.
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