WILL SENIOR CONSERVATIVES BACK LABOUR LEADER JEREMY CORBYN?
GBP/USD continues to edge higher and is set to end the week in a positive fashion, albeit with marginal gains. The daily chart currently shows the pair on course to make five higher lows this week, a positive sign, but the move comes off a 32-month low around 100 pips from the current spot price. The CCI indicator is suggesting that the recent move may be due to oversold market conditions being corrected.
Sterling has been given a boost from positive UK hard data this week with wages rising by more than expected, inflation around target, while retail sales surprised to the upside, with a little help from Amazon. On the flip side, Brexit continues to dominate the direction of Sterling.
The latest Brexit news revolves around Labour leader Jeremy Corbyn who has put himself forward as an interim PM and has asked for cross-party support. The plan is for a vote of no confidence in the current government to be called and won, with Corbyn to be installed as interim PM ahead of a General Election where the Labour Party will run on a Remain platform. There are media reports that a handful of senior Remain-supporting Conservative MPs are actively listening to the Labour leader’s pitch and may join him in an effort to stop the UK leaving the EU without a deal.
GBP/USD PRICE CHART (JANUARY – AUGUST 16, 2019)
Retail traders are 76.8% net-long GBPUSD according to the latest IG Client Sentiment Data, a bearish contrarian indicator. However recent daily and weekly positional changes give us a bullish contrarian bias even though traders remain net-long.