GBP/USD Pulls Off Weekly Highs as Election Polls Predict Tory Victory

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The GBP/USD currency pair pulled off new weekly highs of about 1.2950 to trade at 1.2880 before regaining composure to settle just below 1.2900 in mid-day. The pair has been very volatile over the last two weeks and this behavior could continue through next month as we gear towards the UK elections.

The currency pair has completed a XABCD double-top and XABCD double-bottom reversal patterns in the last two weeks but continues to trade in a relatively bearish sentiment despite this week’s rebound.

GBP/USD Fundamentals Overview

From a fundamental perspective, the GBP/USD currency pair is trading ahead of a busy period with the UK elections incoming. Early poll results are predicting a Tory victory and on Friday Prime Minister Boris Johnson skipped a climate debate and was criticized for it. 

According to the latest round of economic data, the momentum appears to be with the US Dollar. On Wednesday, the US non-Defense Goods Orders ex-Aircraft for October beat the expectation of -0.3% change with 1.2% while the preliminary Annualized GDP for Q3 beat the expected growth of 1.9% with 2.1% growth.

Earlier in the week, the Housing Price Index and New Home Sales beat the expectations of 0.2% (MoM) (Sep) and 0.709M (MoM) (Oct) with 0.6% and 0.733M respectively. The initial jobless claims of 213k were better than the expected figure of 221k while continuing claims came in at 1.64M lower than 1.69M expected.

GBP/USD Technical Analysis (the 60-min Chart)

Technically, the GBP/USD currency pair has been very volatile in recent trading sessions. The currency pair has this week traded below 1.2840 before surging to top 1.2950. This level of volatility has created several short-term trading opportunities for both the bulls and the bears.

The bulls will be looking to pounce on short-term profits by targeting opportunities around 1.2915, 1.2932 or higher at 1.2950. On the other hand, the bears will hope for a major pullback and could target profits at around 1.2880, 1.2865, or lower at 1.2850.

GBP/USD Technical Analysis (the Daily Chart)

In the daily chart, the GBP/USD currency pair appears to be trading closer to the overbought levels of the RSI indicator. The pair continues to trade in a descending channel, which indicates strong bearish bias in the market sentiment. And after completing the ABCD impulse wave pattern, the next move appears to be downwards.

Therefore, the bears will be targeting long-term profits at around 1.2766, 1.2609, 1.2490 or lower at 1.2387. On the other hand, the bulls will hope for a breach of the trendline resistance by targeting profits at around 1.3010, 1.3123, 1.3257 or higher at 1.3371.

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