Sterling jumps after Corbyn agrees to December election
Sterling rose slightly after Labour announced that it would support Boris Johnson’s election push. Jeremy Corbyn, who had previously rejected Johnson’s push, said that he was comfortable going to an election because a no-deal Brexit was off the table. Johnson’s decision to call for an election before he delivers Brexit is a major political gamble. This is because if the remaining side mobilizes and retakes parliament, there is a high possibility that Brexit could be overturned. Still, Johnson believes that his party will carry the day. Recent polls put him ten points ahead of the Labour party. Meanwhile, data from the UK showed that mortgage lending increased to GBP 3.85 billion in September from GBP 3.70 billion a month earlier.
US futures struggled for direction as the Federal Open Market Committee (FOMC) started its monetary policy meeting. The members are expected to deliberate on the state of the American economy. They will also evaluate their economic models to see whether there are any changes on the outlook. Tomorrow, they are expected to slash interest rates by 25-basis points. This will be the third straight month of rate cuts. Meanwhile, the market received important corporate earnings. General Motors third quarter earnings came in at $1.72 on revenue of $35.47 billion. The company took a $3 billion strike charge and lowered its previous full-year guidance. Other companies that released their earnings are Xerox, Pfizer, AutoNation, Corning, and Merck.
The Australian dollar rose ahead of the important CPI data expected tomorrow. The market expects data from the Australian bureau of statistics to show that CPI rose to 1.7% in the third quarter. Consumer prices rose by 1.6% in the second quarter. Trimmed mean CPI is expected to have remained unchanged at 1.6%. In recent months, the Australian central bank has been slashing interest rates to stir growth as the Chinese economy continues to weaken. China is the biggest market for Australian goods.
EUR/USD rose slightly after the Labour party agreed to go to an election. The pair is trading at 1.1090, which is slightly higher than the intraday low of 1.1073. On the hourly chart, the price is along the 14-day and 28-day moving averages. The RSI has moved up slightly from a low of 31 to the current 50. The Chaikin oscillator has started moving higher. The pair may remain in a holding pattern ahead of the Fed’s statement tomorrow.
GBP/USD pair rose slightly today after the Labour party agreed to Johnson’s demand for an election. The pair rose to a high of 1.2873 from the intraday low of 1.2805. On the 30-minute chart, the price is slightly above the 14-day and 28-day moving averages. It is also between the 23.6% and 38.2% Fibonacci Retracement level and along a major resistance level. The ATR has risen, which is a sign of increased volatility. The pair will likely be a bit volatile as traders digest the current news.
AUD/USD pair continued the rally started yesterday when it made a double bottom at 0.6800. The pair reached an intraday high of 0.6858. This level is along the upper line of the Bollinger Bands while the RSI has moved closer to the overbought level of 70. The momentum indicator is above the 100 level. The pair will likely continue moving upwards in the American session. This trend could change depending on the Australian CPI data.