GBP/USD Fundamental Analysis: June 1, 2017
The GBP/USD pair continues to exhibit a negative price action although it was able to get some rest from the recent drop in the value of the greenback. As the UK snap elections are drawing closer and closer, the market is also getting more anxious as the days go by. This market anxiety is now clearly reflected in the performance of the markets, with the sterling pound still unable to catch a significant break as far as the market is concerned. Although the cable pair was able to advance from its range lows of 1.2800 points towards 1.2900 points, the currency pair still looks very weak and could crash anytime soon.
The major reason behind this weakness in the sterling pound are the various opinion polls which suggests that May’s current lead in the forthcoming elections is dwindling bit by bit, with May possibly failing to garner her initially expected majority win. Theresa May had announced the snap elections in the hopes of getting a more substantial majority as compared to her current majority, thereby establishing her position as one of the strongest world leaders. However, with her popularity losing momentum daily, this plan of hers might not come into fruition come election day. This has then caused the possibility of a hung parliament to be endangered, which could spell disaster for May and her ongoing Brexit talks and could also be very bad news for the state of the sterling pound. This could also potentially encourage Scotland to call for another independence referendum.
For today’s trading session, the UK economy will be releasing its UK PMI data, although the current risks surrounding the sterling pound might not be able to be counteracted even if the readings come out as positive. Meanwhile, the US economy will be releasing its unemployment claims and ADP employment reports, all of which are expected to increase the cable pair’s volatility levels. Traders are then encourage to proceed with caution with regards to trading with the cable pair as it is expected to be highly volatile in the next few days.