Are GBP/USD bulls becoming fans of Farage?

October 31, 2019 Off By admin-445
  • GBP/USD has been extending its gains after the Fed’s decision.
  • Speculation about the UK elections is set to determine the next moves.
  • Thursday’s technical chart is pointing to further gains. 
  • Trick or treat? Brexiteers may feel tricked on Halloween – which was supposed to be Brexit Day – the third one. GBP/USD is on the rise, but the main driver is the US Federal Reserve rather than any UK event.
    The Fed cut interest rates for the third time as expected and signaled a pause. The  advanced at first, but then changed course and fell, as Chair Jerome Powell indicated that the bar for raising rates is high. The bank would like to see a significant rise in inflation before hiking, while the threshold for cutting again seems lower.
    See The seeing improvements in global risk
    Earlier, the US reported a growth rate of 1.9% – a marginal slowdown – as the consumer continues pulling the economy forward, but manufacturing is struggling. ADP’s private-sector jobs report pointed to a drop in hiring and shapes expectations for Friday’s Non-Farm Payrolls.
    See : The trend remains the same
    Farage a friend?
    In the UK, election campaigns have kicked off, and tactical voting has been in the limelight. The pro-Remain camp is urging voters to opt for candidates with higher chances to win rather than the first ideological choice.
    On the other side of the political divide, Nigel Farage’s Brexit Party is considering dropping its candidates in some constituencies, facilitating a potential victory for the Conservatives. It is essential to note that Farage favors a no-deal exit, and his support may come with strains attached.
    Prime Minister Boris Johnson’s Tories continue leading the polls, but with 42 left to go, anything can happen. Markets prefer a clear victory and a majority government over a hung parliament.
    Several US figures are due out today, including the Core Personal Consumption Expenditure (Core PCE), which is the central bank’s preferred gauge of inflation. Personal Spending, Personal Income, and other  are also eyed.
    Markets may be spooked – not by Halloween – but by end-of-month flows, which may cause jitters around the end of the European session.
    GBP/USD Technical Analysis

    GBP/USD has broken above the downtrend resistance line that capped it since last week and also surged above the 50 Simple Moving Average on the four-hour chart. It also trades above the 100 and 200 SMAs and enjoys upside momentum. Moreover, the Relative Strength Index is still below 70, thus outside overbought conditions.
    Bulls are in full control.
    Resistance awaits at 1.2950, which was a swing high last week. It is followed by 1.2989, which was the initial post-deal peak. Next, we find a five-month high of 1.3013. 1.3045 and 1.3080 are next.
    Support awaits at 1.2905. Which held  down earlier this week. It is followed by 1.2875, which provided served as both resistance and support in recent weeks. 1.2840 was Wednesday’s low point. The next lines are 1.28 and 1.2750.

    Source: www.forexcrunch.com