Market News & Analysis
GBP Remains Firm, Yet Upside Could Be Limited
Matt Simpson December 12, 2019 1:44 AM
The British pound has continued to point both whilst conservative lead in the polls. With their lead narrowing and a defiantly strong British pound, it begs the question as to whether cable’s upside could be limited.
Whilst the polls vary slightly, they point towards a Conservative Party victory. Yet whilst their lead has narrowed in recent sessions, it is yet to be reflected in price action with cable remaining anchored to its highs.
This begs the question as to how much upside GBP/USD is capable of after such a stellar run and, at such giddy heights, surely leaves the British pound vulnerable to a volatile fall should polls get it wrong again.
As you’d expect, implied volatility has spiked higher this week with the 1-week IV implying ~2% move in either direction. Given realised volatility relatively low, it leaves room for plenty of movement in either direction.
With polls closing at 22:00 GMT and counting officially begins, we should begin to see some action from 22:30 – 23:00 GMT, with a result pencilled in for around 0200 GMT on Friday morning.
In today’s video, we look at price action on GBP/USD and highlight why a pullback is on the cards regardless of the result. Of course, the election’s outcome will have a direct impact on its timing and just how much more bulls can squeeze out of this move.
GAIN Capital UK Limited (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.
No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.