Sterling surged to 1.2920 after YouGov’s MRP poll suggests the ruling Tory party will keep the helm of the UK with a huge majority.
The YouGov’s Poll on MRP model is highly respected due to its predictions of the UK election outcome ever since they forecasted a hung parliament in 2017. The poll suggests Conservatives gain 359 seats against the opposition Labour Party's 211 seat forecast. It also shows that 43% of the vote share will be allotted to the ruling Tories versus Jeremy Corbyn-led Labour Party's 32% expected share, which in turn shows 11 point lead of the Prime Minister (PM) Boris Johnson led Conservatives over the Labour Party.
Yesterday’s Sterling rebound was accompanied by positive activity in open interest and volume, hinting at the likeliness that the move up has further legs to go in the near-term. That said, a visit to 1.30 and probably above has returned to the investors’ radar.
It was a strong day for the USD as most data released has exceeded set expectations. GDP came in at 2.1%, a 0.2% increase for a reading that was predicted to be unchanged.
Initial and continuing jobless claims were down, with initial coming in at 213k and continuing at 1.64 million. Durable goods orders were also up at 0.6%. The release of these positive numbers has given the USD a boost, with EUR./USD trading just above 1.10.
The Euro is operating on slippery grounds and will likely have a hard time defending key support, unless German inflation data, due today, blows past estimates. Weakening dovish ECB expectations. The common currency traded lower yesterday, strengthening the downside bias. All-in-all, the Euro against the Dollar appears set for a convincing break below 1.10 psychological figure.
The breakdown may remain elusive if the preliminary German Consumer Price Index for November beats estimates by a big margin, creating room for the ECB head Christine Lagarde to maintain her neutral-to-hawkish stance for some time..
The CPI is forecasted to drop 0.6% month-on-month in November, having risen by 0.1% in October. EUR/USD may imprint a notable bounce from 1.10 if the inflation number beats estimates by a big margin. On the flip side however, a bigger than expected drop will likely hasten the drop to recent lows below 1.09.
Posted in Daily Market News on Nov 28 2019