Although it has long been talked about that polls can carry a number of errors, the pound fell from its one-month highs after the results of an election poll conducted by YouGov came out, showing a significant decrease on the lead of the Conservative party. Many experts draw attention that there was a minimum difference in votes, that may be an error, which adds unpredictability even more to the elections. Data on economic growth yesterday did not worry traders much. Meanwhile, GDP in the UK in October remained unchanged from the previous month, while industrial production showed an increase of only 0.1%.
Tomorrow, there will be a very important elections in the UK, with which not only the future direction of the country is at stake, as well as its place in the world and its territorial integrity. Also, the election results will be important for the stalemate with Brexit, which has not yet been resolved for more than two years. If the current Prime Minister and his Conservative party win, Boris Johnson will aim to hold Brexit as quickly as possible no matter the consequences. In case of victory of the leader of the Labor party, Jeremy Corbyn, the country will take a very different course towards a program of nationalization and increase in govenment spending.
As of today, Boris Johnson and Jeremy Corbyn will begin their 24-hour mad campaign, since there is no clear majority on either side, except for a small advantage of the Conservative party. Representatives of both parties called this Thursday's vote the most important of the generation, as both sides have very different plans for Brexit.
With this background, the British pound lost more than 100 points against the US dollar and continues to remain under pressure. Investors are clearly taking profits before the important event for the future of the country. There is also no need to talk about any reversal of the upward trend. On the contrary, a larger downward correction will be another reason to open long positions in the trading instrument. Large support levels are now seen around 1.3050 and 1.2940. It will be possible to talk about breaking the monthly highs in the area of 1.3210 only after the publication of the election results.
EUR/USD
The euro regained its position against the US dollar, and continued to rise after the release of the data showing that US productivity fell. Despite the fact that it turned out better than the preliminary value, it could not support the US dollar. According to the report of the Ministry of Labor, labor productivity outside agriculture in the 3rd quarter of this year fell by 0.2% compared to the previous quarter. The preliminary estimate indicated a decrease of 0.3%. Economists had expected productivity to fall 0.1 percent.
Data from Redbook on retail sales failed to please traders. According to the report, US retail sales for the first week of December decreased by 3.6%, but increased by 5.0% compared to the same period in 2018. For the week of December 1 to 7, sales increased by 5.0% compared to 2018.
Yesterday, Larry Kudlow, director of the US National Economic Council, made a number of statements regarding the US-China trade relations, which gave some optimism among buyers of risky assets. Kudlow noted that the duties will remain part of the agenda at the meeting that will be held on December 15, and will be rewintroduced if the final negotiations do not suit the US President Donald Trump. Let me remind you that the abolition of duties is part of the first phase of the US-China trade agreement. Kudlow also did not forget to mention the duties on steel and aluminum from Brazil and Argentina. Despite the fact that US President Donald Trump tweeted about their introduction last weeek, a final decision on this matter has not yet been taken.
As for the technical picture of the EUR / USD pair, further growth will depend on today's data. Most likely, the bulls will try to break above the resistance of 1.1100, but are unlikely to find support from major players. The entire calculation will be on US inflation and the Federal reserve's decision on interest rates. The return of the trading instrument to the support of 1.1075 may increase the pressure on the pair, which will lead to its decline to the lows of 1.1050 and 1.1030.
