The British pound has posted slight gains in the Wednesday session. In North American trade, GBP/USD is trading at 1.2960. On the release front, Halifax HPI posted its strongest reading in five months, with a 0.4% gain. This easily beat the forecast of -0.2%. In the US, Crude Oil Inventories posted a surplus of 3.3 million, surprising the markets, which had forecast a drawdown of 3.1 million. On Thursday, Britons go to the polls in parliamentary elections. The US will release unemployment claims, with the estimate standing at 241 thousand.
It’s election eve in the UK, and the nation is gripped with election fever, as Britons go to the polls on Thursday. Prime Minister Theresa May’s Conservatives continue to cling to a lead, but the most recent opinion polls are deeply split as to what the political landscape will look like on Thursday night. An Opinium poll gave May a 7-point lead, and forecast that she would increase her majority in the 650-seat parliament. A very different scenario is painted by a YouGov poll, which predicts that May will win 302 seats, short of a majority. One key variable is the extent of the turnout among young voters, a group which generally is pro-Labour. As well, a large segment of voters remain undecided. Opinion polls badly missed the mark in the Brexit vote, when the victory by the “Leave’ camp stunned the world and sent the pound to 30-year lows.
With just hours to go before voting booths open across the UK, there’s tremendous uncertainty in the air. Will Prime Minister May hold off the spectacular charge by Labour? If so, will she win a majority or will the country face a hung parliament? If the latter scenario unfolds, no party will have a majority, and May will enter the difficult Brexit negotiations with a weak hand, as she will have to accommodate a hostile opposition in order to govern. A more extreme scenario is that of Labor and the Liberal Democrats joining forces to form a coalition government, leaving the Conservatives in opposition and uncertainty over Brexit. Global markets are following the election campaign with bated breath, and the pound could swing in either direction, depending on the results. The markets have priced in a May victory, so a majority for the Conservatives could bump the pound a bit higher. Things could get very messy, however, if May fails to win a majority, with the ensuing political vacuum as to which party will govern the country. Investors could get cold feet in such a case, and the pound could drop sharply, perhaps as low as $1.20, if a government is not quickly put in place.
Wednesday (June 7)
- 3:30 British Halifax HPI. Estimate -0.2%. Actual +0.4%
- 10:30 US Crude Oil Inventories. Estimate -3.1M. Actual +3.3M
- 15:00 US Consumer Credit. Estimate 15.2B
- 19:01 British RICS House Price Balance. Estimate 20%
Thursday (June 8)
- All Day – British Parliamentary Elections
- 8:30 US Unemployment Claims. Estimate 241K
*All release times are EDT
*Key events are in bold
GBP/USD for Wednesday, June 7, 2017
GBP/USD June 7 at 12:15 EDT
Open: 1.2906 High: 1.2967 Low: 1.2885 Close: 1.2958
- GBP/USD inched higher in the Asian session. The pair posted losses in the European session and is flat in North American trade
- 1.2865 is providing support
- 1.2946 is the next resistance line
Further levels in both directions:
- Below: 1.2865, 1.2706, 1.2571 and 1.2401
- Above: 1.2946, 1.3058 and 1.3120
- Current range: 1.2865 to 1.2946
OANDA’s Open Positions Ratio
GBP/USD ratio is showing gains in long positions. Currently, short positions have a majority (59%). This is indicative of trader bias towards GBP/USD continuing to move lower.