Summary:
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GBPUSD surges up through $1.30
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Tory lead holding in polls
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Service sector PMI improves from flash reading
The pound has made a break higher above the $1.30 handle, running up to levels not seen since May. The lead for the Conservatives seems to be holding at around 10 percentage points and unless this narrows in the next week then it is looking increasingly likely that we will get a Tory majority.
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GBPUSD has made a strong push higher this morning and in doing so the market has broken above both the psychological $1.30 level as well as prior resistance around 1.3010. Source: xStation
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The move can be put into context better from a longer-term perspective with the breakout seemingly ending a 7-week consolidation and seeing price move up to a 7-month high. Prior resistance around 1.3010 can now be viewed as possible support. Source: xStation
There’s also been some positive data out from the UK that will likely serve to support these gains with the services reading for November being revised up to 49.3 from 48.6 previously (in the flash reading. The prior month showed 50.0.) This is the 2nd month running that this indicator has topped estimates but it is also the 2nd time in 3 releases that it is below the 50 mark and therefore signalling contraction.
The Services PMI continues to point to a subdued level of activity and while it was revised higher from the flash reading a couple of weeks ago, this is still in keeping with a subdued level of activity. Source: Bloomberg
As the last of 3 keenly viewed industry surveys in the past 3 days this rounds of the latest batch of leading indicators on the UK economy, leaving an overall impression of a slight improvement against a pessimistic backdrop, with activity on the whole remaining at subdued levels.
US-China moving closer to a deal?
There’s been a flurry of activity across several markets after some upbeat reports on the trade front. Citing people familiar with the matter the US and China are said to be moving closer to a trade deal despite the heated rhetoric and the news caused a near immediate reaction in the markets with European stocks and US futures surging higher. The impact can also be felt in the fixed income space with bond yields rising and safe haven markets such as Gold have moved lower. The recent price action continues to demonstrate how sensitive the markets are to any trade-related news and this will likely remain the case heading into December 15th deadline where additional tariffs are set to be slapped on if an agreement can’t be reached.
The FTSE has moved off its recent lows on the trade news but remains firmly lower in recent sessions after price once more failed to break above the 7450 resistance last week. The market has found a little bit of support around the mid-October lows of 7135. Source: xStation
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