While the main dollar pairs are closely monitoring the news flow regarding the prospects for US-Chinese relations, the pound-dollar pair continues to trade in its "coordinate system", responding to local fundamental factors. The election campaign in the UK is in full swing, so all the news related to the possible outcome of the plebiscite has a strong influence on the dynamics of GBP/USD All other fundamental factors have traditionally been indirect and secondary.
For example, the day before yesterday, a televised debate took place between Boris Johnson and Jeremy Corbyn. Despite the nominal victory of the current prime minister, the pound was under pressure as it fell against the dollar by the middle of the 28th figure. Traders expected more from Johnson: more convincing rhetoric, more decisive theses and a more impressive distinction from the main competitor. But according to a YouGov poll, he did not impress the British, defeating Corbyn by a margin of only 2 percentage points. 51% of the viewers voted for Johnson while 49% for the Labour Party. And although this survey cannot be projected onto the ranking positions of Conservatives and Labour (since only one and a half thousand citizens took part in the survey), traders were concerned about such an uncertain result.
Neither Johnson nor Corbyn announced any fundamentally fresh ideas. The prime minister insisted that his deal with Brussels is the best option for the deal, while his opponent expressed a radically different opinion - according to Corbyn, Johnson only worsened Britain's position in the negotiations, and the deal he proposed was even worse than Theresa May's Chequers Plan. The head of the British government insisted that Brexit should take place before January 31 on the basis of his deal, while the opposition leader urged him to put the document to a referendum. When Johnson asked his opponent if he would support the deal in this case or would actually call for a "hard Brexit," Corbin did not give a clear answer. After that, the prime minister criticized him for populism and the lack of any constructiveness. Nevertheless, according to the respondents, Corbyn was more convincing in other areas, for example, 54% felt that he coped well with the topic of health.
Despite the nominal victory, the results of the debate were not in favor of the British prime minister: according to the latest YouGov polls, the gap between Conservatives and Labour is narrowing: Tories support at 42% (three points less than last Saturday), Labor at 30% (an increase of two points). In addition, other participants in the election race also recalled themselves: the leaders of the Liberal Democratic and Scottish National Parties expressed their indignation that only Johnson and Corbyn (who in one way or another advocate Brexit) were invited to the debate, while the opinion of millions of British who want stay in the European Union was ignored.
Such a fundamental background forced GBP/USD traders to shift to the middle of the 28th figure - the pair showed a sluggish, but still a downward movement at the beginning of the week. True, the bears could not fall below 1.2860. In general, downward impulses must now be treated with particular caution: the pound is keenly reacting to negative political news, but is recovering just as quickly on any positive.
For example, today the results of the Savanta ComRes study, according to which the Labour Party continues to lose electoral points, was announced today, as the positions of the Conservatives look more confident. Now the Tories are ahead of the opposition by 12 percentage points - this is the highest gap since the last election held in 2017.
In addition, according to surveys by British newspaper The Telegraph, many Labour supporters revised their political views in favor of Conservatives. Almost 20% of those who have previously voted for Corbyn are now ready to cast their votes to Johnson. Most of them do not believe in his ability to withdraw the country from the European Union. But Johnson, according to "ex-Labour supporters", will fulfill this mission without any hesitation.
Such results are explained by the fact that many Britons are tired of years of uncertainty, while Corbyn can significantly prolong this period. In addition, Johnson does not insist on a hard Brexit, but on a civilized one, while the leader of the Labour Party changed his position on this issue several times: at first he wanted to hold a second referendum on Brexit, then he abandoned this idea, and now he is lobbying the referendum again - but with regard to the conditions for withdrawal from the EU (the Brexit issue itself is no longer in dispute with them). Conservatives continue to gain momentum amid such inconsistency of the Labour Party, thereby supporting the British currency.
I repeat - the GBP/USD prices should be taken with extreme caution to the downward "arches". Let me remind you that according to Johnson, each candidate from the Conservative Party signed a written pledge that, if elected, he would vote for the draft deal with Brussels proposed by the prime minister. Therefore, the possible victory of the Conservatives is now quite reasonably associated with the resolution of the long-term "divorce proceedings". If the gap between the Conservatives and the Labour Party continues to increase, the pound paired with the dollar will enjoy a kind of immunity from the influence of other fundamental factors (including American ones). Another poll from YouGov (if it will be in favor of the Tories) will help the GBP/USD bulls again approach the 30th figure.
The material has been provided by InstaForex Company - www.instaforex.com