GBPUSD is trying to overcome the market pessimism of the YouGov MRP poll. Recent polls favor a hung parliament. The Conservatives are widely criticized. The dot plot of the US Fed, Powell’s speech, will be the key to follow. Here is the GBPUSD Fundamental Analysis of 11 December, 2019.
11 December, 2019 | AtoZ Markets – GBPUSD consolidated losses early in the day to 1.3145, -0.35% on the day while heading to the London open on Wednesday.
GBPUSD Fundamental Analysis – 11 December 2019
The quote dropped to the lows of 1.3107 during the Asian session. This is after the market’s favorite poll for the UK elections on 12 December, suggesting a hung parliament. The YouGov survey based on the MRP model now reduces the number of seats to 339 from 359 previously. The ruling Conservative Party was originally scheduled to win on 27 November. On the contrary, the opposition Labor Party will win 231 seats, an increase of 20 seats from 27 November, according to the survey.
Fears of a hung parliament are also reinforced by the recent criticism of Prime Minister Boris Johnson on various issues. Those are a lack of sympathy, doubts about the future of the National Health System (NHS), and concerns for Northern Ireland.
Besides, one-week pound risk reversals, a gauge of calls to puts, fell to -5.32, signaling the strongest bearish bias since September 2016. On the other hand, the trade fight between the United States and China continues with the last words of the White House advisor, Peter Navarro. He said, “It all up to Chinese.”
US FOMC and US CPI
The British elections hold the key to Brexit and its relations with the European Union. Investors are all cautious before the event. Besides, the final monetary policy meeting of the US Federal Open Market Committee (FOMC) will also be the culmination. The Fed is less likely to offer a policy change. Traders will be more interested in seeing how the US central bank will act in 2020, given the recent evolution of data.
Before the Fed, the US Consumer Price Index (CPI) for November will also be important. “We expect global inflation to increase by two-tenths to 2.0% year-on-year in November (0.2% m/m). It is mainly reflecting higher prices in the non-food and energy segment. Core inflation remains unchanged at 2.3% y/y on the back of a 0.2% increase in m/m, “says TD Securities.
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