GBP/USD confronts 200-week SMA amid upbeat polls, UK political plays

GBP/USD seesaws near 1.3115 ahead of the London open on Thursday. The pair nears the multi-month peak marked Wednesday amid optimism surrounding the United Kingdom’s (UK) political plays.

Be it expecting a soft Brexit or no rate change till 2022, versus the previous forecast of 2021, Reuters seems to be optimistic about the UK’s catalysts and the same might have lured the buyers. Also increasing the pair’s strength is The Telegraph’s news that Prime Minister (PM) Boris Johnson pledges £200 tax cut for millions within weeks of Tories being elected. On the contrary, The Independent signals that the opposition Labour Party raising worries for political donors while the BBC marks the increase in bills as conveyed by Labour's shadow chancellor John McDonnell.

Though, The Guardian raises doubts on the ruling Tory Party’s leadership after the December election as polling by Opinium shows that the opposition Labour Party is beating the Conservatives by 25 points among Black, Asian and Minority Ethnic voters (BAME). Also increasing doubts is the ComRes poll that shows Conservatives and Labour both losing 1% to 42% and 32% respective stands.

Moving on, the United States (US) President Donald Trump’s London visit for North Atlantic Treaty Organization (NATO) summit couldn’t turn down the blames on the Tories that they’re planning to sell the National Healthcare System (NHS) to the US.

Elsewhere, the US President Trump’s optimism concerning the trade talks with China failed to stop diplomats from the dragon nation while pouring cold water on the positive mood.

Looking forward, markets are likely to keep eyes on the busy US economic calendar while also watching over trade/political headlines for fresh impulse. “The market is projecting the trade deficit to shrink further at the start of Q4 to USD -48.6bn in October from -52.2bn in the month before. Separately, consensus expects initial jobless claims to remain subdued at 215k for the week of Nov 30, essentially unchanged vs the prior week. The print would maintain claims close to record lows, suggesting the labor market remains resilient,” says TD Securities.

Technical Analysis

While a weekly closing beyond 1.3105 becomes necessary for the pair to aim for May high close to 1.3180, a downside break of October top, near 1.3013, can trigger a fresh pullback.