GBP/USD: policy still keeps the pound in good shape


The GBP/USD pair jumped to a six-week highs, testing the 1.30 mark.

According to experts, it will be possible to talk about the development of an upward trend in the British currency only if it consolidates above the level of $1.30, however, it has not been able to do this since October.

In anticipation of early parliamentary elections in the UK, the pound is more responsive to opinion polls and, to a lesser extent, the country's macroeconomic indicators.

According to the latest Kantar poll, voters' support for the Conservative Party grew by 1% to 44%. This helped the Tories to increase the gap between the Labour Party to 32%, and now it is 12% against 11% recorded in the previous week.

A Conservative victory by the markets is expected to reduce uncertainty around Brexit's future prospects, and this inspires the pound.

"Expectations for Conservatives to gain a majority in Parliament in a general election will mean that the pound will retain its recent gains," the MUFG believes.

"At this stage, we suspect that it is too late for the Labour Party, and the average number of polls that the Conservatives will receive is likely to support the pound this week," said MUFG analyst Fritz Louw.

"Nevertheless, the pound's growth potential is limited due to uncertainties around Brexit and recent economic data indicating a weakening British economy," he added.

According to the final data of IHS Markit, the index of business activity in the manufacturing sector of the UK fell to 48.9 points in November against 49.6 points recorded in October. Despite the fact that the value of the indicator was higher than the preliminary estimate (48.3 points), in general, the data are weak and suggest that activity in the country's manufacturing sector continues to decline.

"British manufacturers are reducing the number of jobs at the fastest pace since 2012. This is another indication that the global slowdown, along with the uncertainty surrounding Brexit, continues to adversely affect the manufacturing sector," IHS Markit said.

The material has been provided by InstaForex Company -