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GBP Finds Some Support in Latest ICM Poll

GBP Finds Some Support in Latest ICM Poll

Nick Cawley, Senior Strategist

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Talking Points

- Latest ICM poll shows the Conservative Party with a 12 point lead, down from 14 points last week.

- Some UK polls show UK ruling party with a lead of between 6-8 points.

- See the DailyFX Economic Calendar and see what live coverage for key event risk impacting FX markets is scheduled for next week on the DailyFX Webinar Calendar.

GBP/USD gained in excess of half-a-cent Tuesday after the latest UK voting intention poll giving the Conservative party a 12 point lead over Labour, albeit down from 14 points last week.

The poll by ICM for The Guardian showed the Tory party at 45%, down 2%, while Labour remained unchanged at 33%. A YouGov poll last weekend showed the difference between the two major parties narrow to 5 points, before widening again to 7 points, while the latest Survation poll put the difference between the two parties at 6 points.

According to ICM the shift in polling numbers is being attributed to Labour leader Jeremy Corbyn’s populist policies, including the abolition of student tuition fees (normally GBP 9,000 a year) and the return to state funded grants, resonating with younger voters.

GBP/USD picked up Tuesday, after a long bank holiday weekend, to trade just under 1.2900 from Friday’s low of 1.2775. The British Pound has also bounced off the 50-dma and is within half-a-cent of breaking back above the 20-dma, another potentially bullish trigger.

Chart: GBP/USD Daily Timeframe (February 2 – May 30, 2017)

Chart by IG

And the latest IG Client Sentiment Data, show retail investors remain short GBPUSD.

Retail trader data shows 42.2% of traders are net-long with the ratio of traders short to long at 1.37 to 1. In fact, traders have remained net-short since Apr 12 when GBPUSD traded near 1.24853; price has moved 3.1% higher since then. The number of traders net-long is 5.6% lower than yesterday and 10.2% higher from last week, while the number of traders net-short is 13.8% higher than yesterday and 4.0% lower from last week.

We typically take a contrarian view to crowd sentiment, and the fact traders are net-short suggests GBPUSD prices may continue to rise. Positioning is more net-short than yesterday but less net-short from last week. The combination of current sentiment and recent changes gives us a further mixed GBPUSD trading bias.

--- Written by Nick Cawley, Analyst

To contact Nick, email him at nicholas.cawley@ig.com

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