Sterling has been gaining strength in the past few days with technical analysts expecting it to finally challenge the long-held psychological resistance at 1.30 level. However, given the events of Tuesday which highlighted that Prime Minister Boris Johnson is apparently losing his public favorite status, the GBP/USD pair started moving south once again.
As of the London session on Wednesday, Cable has lost almost 0.29% and is currently trading at 1.2915. The pair had printed a high of 1.2985 on Monday.
Conservative and Labor party leaders had an ITV debate on Tuesday. While the investors were expecting more drama, the debate remained calm and composed with leaders of both sides elaborating on their agendas regarding the UK’s departure from the European Union. What surprised the Forex traders interested in the GBP/USD pair, however, was the poll that concluded the debate.
PM Johnson Received 51% Votes Against Corbyn’s 49%
Thus far, Johnson has won all polls with a significant difference of 14 points (minimum) against the opposition leaders. The poll of yesterday, however, showed unexpected results with the UK’s Prime Minister winning the poll with only 51% votes while Jeremy Corbyn of the Labor party received 49% votes. The insignificant difference of only 2 points was construed by the economists as PM Johnson losing his status as the public favorite.
Opposition leader quickly gaining public support is not the only challenge posed at Johnson’s administration. Matters of postponing corporate tax cuts and Russian interference in the Brexit referendum are yet to be addressed as well.
Cable has retreated from a monthly high of 1.2985 on Tuesday, located right below the strong psychological resistance at 1.30. According to the Forex analysts, failure to break above 1.30 represents a lack of confidence among the buyers that opens the way for further downside in the days to come.
Technical Levels To Watch In GBP/USD Pair
As per the technical analysts, the 21- day moving average is currently located at around 1.2880 that marks immediate support for GBP/USD on the downside. Breaking below this level will see the monthly low of around 1.2770 as the next target. On the upside, 1.30 remains to be strong psychological support for the pair with the October’s high of 1.3015 continuing to pose a challenge for the buyers.
U.S crude oil inventories is set to be announced later today at 15:30 GMT. The report is expected to have a moderate impact on GBP/USD that will further hint at the imminent direction for the pair in the Forex market.