Sterling (GBP) Bid Remains as General Election Campaigning, BoE Nears
Sterling Analysis, Chart and Price:
- GBPUSD underpinned as professional short-covering continues.
- BoE ‘Super Thursday’ likely to highlight economic weakness.
Brand New Q4 2019 Sterling Forecast and Top Trading Opportunities
GBPUSD Underpinned by Short-Covering
The latest CoT report shows that professional traders are continuing to cover their Sterling shorts, underpinning the British Pound at its current levels. Sterling shorts have been reduced over the last few weeks as market participants take an increasingly positive view on the upcoming General Election. The latest polls have the Conservative Party ahead by anywhere between 8 and 12 points which would give them a working majority in Parliament. General Election campaigning officially begins on Wednesday when Parliament closes for five weeks.
Sterling traders will also be looking ahead to the latest Bank of England policy announcement and quarterly inflation report on Thursday. The central bank is expected to highlight that growth remains stifled in the UK, due to Brexit uncertainty, while inflation remains ahead of target. If growth expectations are further downgraded, interest rate cuts will be priced-into Sterling.
Today also sees the election of the new Speaker of the House Commons after John Bercow ended his tenure last Friday. Bercow was a divisive speaker with many in government frustrated by his Remain-friendly maneuverings.
GBPUSD trades in a very tight range at the start of the week and will likely stay there until Thursday’s BOE meeting. The daily chart continues to look positive, but upside momentum has slowed. Friday’s doji highlights this short-term indecision and suggests that a bearish reversal may well occur. On the positive side, the 50-day moving average is nearing the 200-dma and may well go through, making a bullish ‘golden cross’.
GBP/USD Daily Price Chart (April – November 4, 2019)
IG Client Sentiment shows that how traders are positioned in a wide range of assets and markets.
Traders are currently 51% net-short GBPUSD, a bullish contrarian bias.
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