Among the major currencies, the British pound gave up the most ground to the US dollar in yesterday’s trading. GBPUSD steadily traded lower from its opening price of 1.2899 and finished the day at 1.2863.
What caused the currency to drop? Results of the latest polls suggest that incumbent Prime Minister and leader of the Conservatives, Boris Johnson, may not have dominating lead as earlier thought. According to Kantar which surveyed 1,097 people, the Conservatives still lead with 42%. However, what worried forex traders was that Labour has narrowed the gap with a 31% poll rating.
Not even worse-than-expected data from the US was enough for GBPUSD to find bids following the news.
Later today, YouGov will release another set of poll results at 10:00 pm GMT. It is said that YouGov was able to predict the hung parliament that happened a couple of years ago. Should the poll show that there’s risk of getting another one in the upcoming general elections, the pound could once again drop. It would be bad news for the pound as it raises skepticism that a Brexit plan could get passed in parliament.
On the hourly chart of GBPUSD, we can see that the currency pair has formed what looks like a symmetrical triangle. There is minor resistance around 1.2869 where GBPUSD bounced from late into the New York session yesterday. A break of this level could push the currency pair to its intra-week high at 1.2910.
On the other hand, a close below yesterday’s low at 1.2834 could mean that the currency pair may soon test support at the bottom of the range I pointed out yesterday at 1.2789.Download our latest quarterly market outlookfor our longer-term trade ideas.
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