Forex Sky Eye APP News: On December 1, Forex strategist James Skinner pointed out after analysis that after last week's strong rise, the pound is ready to rise further against the US dollar, although the British election news turned negative and may suppress the pound, the US dollar will continue to remain strong. However, Commerzbank warned that the May high of 1.3187 is a strong resistance level facing the exchange rate. If the exchange rate is suppressed by this level, the trend will continue to move downward and will continue to hover between the October high of 1.3013 and the November low of 1.2768.
pound is expected to continue to rise this week, with a May high of 1.3187 becoming a strong resistance level
pound rose nearly 1 percentage point against the US dollar last week, becoming the second best-performing currency among major currencies. Previous YouGov polls predict that the Conservative Party, , where British Prime Minister Johnson is located, will win the election. The pound fell below 1.20 against the dollar on September 3, hitting a low of 1.1959, and the exchange rate has rebounded about 9% since then and is expected to maintain its upward momentum in the coming days. Karen Jones, head of technical analysis at Commerzbank, said: "The current trading range of the pound against the US dollar is between the October high of 1.3013 and the November low of 1.2768. If the exchange rate can break through 1.3013, it is expected to rise to the 200-week moving average of 1.3109, which is the 50% 2018 high of 1.3167 retracement level. If it can continue to break through, it is expected to challenge 1.3170 or even the May high of 1.3187."
Jones predicts that the pound may recover the 1.3187 high in the next few weeks or months. However, he also believes that the pound may also weaken in the next one to three weeks and fall back to last week's lows.
5 high of 1.3187 is a strong resistance level facing the pound against the US dollar, and it may be difficult to successfully break through. Jones believes that as long as the pound is suppressed by this level, the trend will continue to move downward and will continue to hover between the October high of 1.3013 and the November low of 1.2768. If the exchange rate fails to successfully hold 1.2768, the 200-day moving average may be measured at 1.2701. The next support level is the September high of 1.2582. If it falls below this level, it may further fall to the 1.2511 and 1.2196/94 resistance levels.
This week, the news of the early election of the UK will continue to affect the trend of the pound, although the news of the last weekend has turned negative. Polls show that the Conservative Party’s approval rating has begun to decline, while the Labour Party’s support rating has increased, and the support rating gap between the two parties has narrowed.
polls are disappointing, as analysts increasingly suggest that the pound’s rise has come to an end and that if it wants to rise further, the Conservatives need to achieve a real victory in the election.
Just last week, Oliver Allen, an economist at Capito Macro, said that despite the growing possibility of the Conservative Party taking up a majority, the pound has only slightly higher in recent weeks. The market believes that if the Conservatives can really win a majority, the pound may rise further, but the party's Brexit stance limits the upside of the exchange rate.
At the same time, the market is also worried that the opposition Labor Party will win the general election unexpectedly. Capito Macro said Labour's economic and political agenda could bring the pound to a low of 1.20 against the dollar (i.e., plunging more than 900 points from current levels).
David Bloom, global head of foreign exchange research at HSBC, said there could be three results in early elections in December: one is the Conservatives' majority and the other is the emergence of a coalition of parties supporting the second referendum, both of which can drive the pound to rise. The third result is a suspended parliament, which will trigger a sharp decline in the pound. Compared with the first two results, there is a greater possibility of a suspended parliament, although it triggers a greater decline in pound sterling. Although we believe that a rise in the pound is a more likely result based on the current poll, if this prediction is wrong, the probability of a downward trend is higher than the upward trend.
Investors also need to pay attention to the UK November Markit service industry and comprehensive PMI data at 17:30 Beijing time on December 4, although the importance of these data has been reduced in the face of news of early elections.
This week, the US dollar needs to pay attention to the international trade situation and the US non-farm data, etc.,
The US dollar trend this week depends on the development of the international trade situation, and on the other hand, it depends on the economic data of the United States: the US November Markit Services PMI at 22:45 on December 4, and the US November ISM non-manufacturing PMI at 23:00, and the US November non-farm data at 21:30 on December 6.
Any US decision to impose trade tariffs on EU goods may cause EU Commission reaction, which may boost the dollar, as such an incident may put pressure on the euro.
Derek Halpenny, an economist at Mitsubishi UF, said that the US dollar is fully capable of further strengthening in the short term. The euro's break below 1.1000 against the US dollar will be an important bullish technical signal for the US dollar. The results of the German SPD election last weekend could also trigger an euro sell-off.
One of the ruling German parties, the Social Democratic Party, elected two "anti-Merkel" chairmen on November 30. Industry analysts commented that this triggered a "political earthquake" in Germany and German Chancellor Angela Merkel may step down early.
It is worth noting that official data released last week showed that the U.S. economy actually rebounded in the third quarter, rather than slowing down as many people think. Recent data has hit the market's excessive bet on the Fed's recent interest rate cuts, and economic data this week will also be closely watched as it will give people a better understanding of U.S. economic performance in the fourth quarter. "After rebounding from a 10-year low last month, the market expects ISM manufacturing to continue to recover to 50 points. However, a weak regional Fed survey in November showed that there are some downside risks around this estimate. Non-farm employment is always important, and the Fed will closely monitor the data to assess whether the recent easing policy has begun to take effect. The market generally expects the U.S. non-farm growth in November by 190,000, and the unemployment rate remains flat at 3.6%. "
