GBPUSD had been trading close to 50 pips above its daily open price yesterday when it dropped like a rock. The currency pair fell to 1.2891 after reaching an intraday high of 1.2969. It then closed the day 17 pips lower at 1.2904.
There were no high impact forex news on the calendar for the pound yesterday. Only data on public sector borrowing was released which showed that the government has a budget deficit of 10.5 billion GBP versus the 8.5 billion forecast. However, we did get more poll results which showed that Conservatives are still in the lead ahead of the general elections. This was what helped the pound climb higher during the European session.
Trade tensions between the US and China continued to worry investors yesterday which may have weighed down the pound. Risk aversion swept market participants as the Hong Kong rights bills gets passed to US President Donald Trump for his approval. According to analysts, the President is likely to sign the bill into law given the unanimous support of the Senate and Congress for it.
Today, UK PMIs are due for release at 9:30 am GMT. The manufacturing PMI is eyed to print at 48.8 while the services PMI is seen at 50.1.
GBPUSD Outlook
GBPUSD has been trading in a range since mid-October. Better-than-expected data or positive developments on the political front from the UK may push the currency pair to the top of the range and test resistance at 1.2975. Alternatively, disappointing reports or news that could jeopardize a Brexit plan being passed in Parliament could push GBPUSD to support at 1.2769.Download our latest quarterly market outlook for our longer-term trade ideas.