December 10 is an important day for the pound: release of data on the growth of the British economy, and at the end of the US session, YouGov will publish its latest public opinion poll, conducted by a certain methodology, taking into account the specifics of the national electoral system. In addition, we will find out data on the growth of industrial production in the UK - these figures can also affect the general mood of traders. In other words, traders of the GBP/USD pair will feel the turbulence of increased volatility tomorrow, especially if the real numbers do not match the predicted ones.
Let me remind you that at its November meeting, the English regulator lowered its forecasts for the main economic indicators. The GDP growth for the next year was reduced from 1.3% to the lowest level over the past ten years, 1.2%, and in 2021 - from 2.3% immediately to 1.8%. The Bank of England also lowered its inflation forecast - according to its members, its growth will slow by 1.2% by mid-2020, due to lower prices for oil and regulatory restrictions on electricity and water tariffs.
The British GDP indicator has been in the negative area (on a monthly basis) for the second consecutive month: the indicator reached -0.2% in August and -0.1% in September. Data for October will be released tomorrow. According to preliminary forecasts, the volume of GDP will grow by 0.1% in monthly terms, and slow down to zero in quarterly terms. If the real numbers coincide with the predicted values, they are unlikely to inspire the GBP/USD bulls to conquer new price heights. Mixed dynamics are also expected for industrial production. Growth is expected (+ 0.2%) on a monthly basis, while a decline is expected (-1.2%) in annual terms.
In other words, macroeconomic reports are unlikely to support the British currency tomorrow, even if they come out slightly better than expected. If the numbers are in the red zone, then the GBP/USD pair can update the weekly low by returning to the framework of the 30th figure. However, it is worth recognizing that macroeconomic statistics tomorrow in any case will play a secondary role. Regardless of what the British economy demonstrates, the reaction of the market to published releases will be short-term. After all, a survey from the YouGov research agency will be published tomorrow. This will be the last poll ahead of the early parliamentary elections, which will be held on December 12.
I have to mention that the poll from YouGov is important for traders - experts of this agency use a methodology that is more adapted to the British electoral system and has a larger sample of respondent voters. This methodology made it possible to predict the collapse of Theresa May in 2017 (while other sociologists predicted her majority on the results of early elections). YouGov announced that the Conservative Party will receive strong support for the December elections at the end of November. According to preliminary estimates, the Tories will be able to form an independent majority in the House of Commons with a substantial margin of almost 40 votes. In turn, the Labour Party will be able to get no more than 210 seats, while Corbyn currently "owns" 262 votes in the House of Commons. Scottish Nationalists can count on 43 seats, while ardent opponents of Brexit - the Liberal Democrats - are forecasting only 13 seats in Parliament.
If YouGov confirms the Conservatives' leadership (not nominal, but actual - according to the number of seats won in Parliament) tomorrow, then the pound will receive strong support throughout the market, including paired with the dollar. The intrigue regarding the results of this survey remains. Moreover, today traders have a cause for concern: the ICM research agency has published its data, according to which Labour support has grown to 36%, while the Conservative Party is still gaining 42% of the vote. In other words, Boris Johnson's main opponents narrowed the gap with the Tories to 6%, thereby putting pressure on the British currency. It is for this reason that the pound suspended growth today against a basket of major currencies.
Such a reaction indicates that politics remains the number one priority for GBP/USD traders: if the data from YouGov disappoints, the pound will tumble to the 29th figure, regardless of how much the British economy grew in November. And vice versa - a significant gap between Conservatives and Labour eliminates the negative macroeconomic reports. Thus, by the end of tomorrow, the GBP/USD pair can either test the 32nd figure or return to the bottom of the 30th price level (with a probable entry into the 29th figure, up to 1.2940 (the middle line of the Bollinger Bands indicator on daily chart).
The material has been provided by InstaForex Company - www.instaforex.com