GBP/USD continues to gain ground. Currently, the pair is trading at 1.3171, up 0.30% on the day. There are no British events on the schedule.
Johnson Lead in Polls Boost Pound
The British pound gained 1.6% last week, marking its highest 1-week gains since mid-October. All eyes are on the British election on Thursday, and election polls are having a significant, positive impact on the British pound. Polls continue to point to a 10-points lead for Boris Johnson’s Conservative party over Labour, and this is good news for investors. The Conservatives are pro-business, and investors are hopeful that a Conservative government will act quickly and wrap up the tortuous Brexit process. Still, polls can be wrong, as we learned all too well after the Brexit vote, when voters shocked the world with victory for the ‘Leave’ camp.
The pound posted strong gains last week despite soft PMI figures, which pointed to contraction in the manufacturing, services and construction sectors. The British economy is projected to contract by 0.1%, in the third quarter, so the new government will have its work cut out in trying to put the economy back on track.
GBP/USD has moved some distance above 1.3100 and has moved close to resistance at 1.3200. This major line has held since late March, so it would be a significant development for the pair if this line is breached.
Pacific Currencies – Summary
USD/CNY has started the new trading week quietly. The pair is currently at 7.0398, up 0.07% on the day. Chinese exports fell for a fourth straight month in November, with a decline of 1.1% on a year-to-year basis. This reiterates the toll that the U.S.-China trade war has taken on the Chinese economy, particularly the export and manufacturing sectors.
AUD/USD was up 1.1% last week, but has started the new week with slight losses. Currently, the pair is trading at 0.6825, down 0.20% on the day. Tuesday will be busy, with the release of consumer and business confidence indicators, so I expect stronger movement from the pair in Tuesday’s Asian session.
NZD/USD enjoyed an excellent week, gaining 1.9 percent. Currently, the pair is trading at 0.6552, down 0.09% on the day. New Zealand Manufacturing Sales rebounded with a gain of 0.9% in Q3, after a decline of 0.7% in the second quarter.