GBP - British Pound
Many are labelling Thursday’s election as the most important of the decade due to the long-term effect it will have on the UK and world. The polls in the lead up have been dominated by Tory majority predictions, however Tuesday saw the release of a reputable poll that indicated PM Johnson's lead was waning in the dying hours. Prior to the forecast, GBP/USD was comfortably trading above the 1.3200 handle however after the release, retraced to just above 1.3100. This indicates that a Johnson majority is still the general consensus, however markets are less optimistic than at the start of the week.
The next two days will bring with it an extremely reactive market. There is wiggle room on the upside for a Tory majority and acres of room on the downside in the case of a hung parliament or Corbyn victory. In other news, disappointing monthly UK GDP figures were released on Tuesday however a large part of poor data still stems from Brexit uncertainty. Once again, the UK must first eradicate their political issues (election/Brexit) and the technical data should follow suit.
Across the pond, the US may also experience a shift in the currency markets. The FOMC are expected to release their Monetary Policy Statement and 2020 Economic Projections in their final meet of the year. Although the FOMC are expected to leave rates unchanged, their economic outlook will provide a great insight into the future of US trade and how the spill over from tensions with China are perceived domestically. After the release of extremely positive US non-farm payrolls last Friday, the Feds’ outlook will probably be fairly bullish going forward, driving the US Dollar slightly higher against its’ peers.
In Europe, the ECB will also release their final Monetary Policy Statement of the year. Much like in the US, interest rates are expected to remain unchanged and the outlook going forward will be the key currency driver. In addition, the Euro will see a spill over affect from the UK election tomorrow and is expected to rally on the back of a Johnson majority and dip on the announcement of a Corbyn victory.