In the last hour, the British Pound (GBPUSD) leaped higher by 67 pips as the Labour party changed their position and now backs PM Johnson’s idea to hold a December general election. The vote is expected to take place later today.
Compared with the volatility we have seen in GBPUSD in the last few weeks, 67 pip is not much, however, it does keep the short-term uptrend intact.
Over the last few days, the price found a base just above Thursday’s low of 1.2789, and if the price manages to trade above the low, the price might be able to reach the October high at 1.3017, followed by the May 2019 high at 1.3179.
However, if the price slides below Thursday’s low of 1.2789 then the pair would start on an overdue correction that could take the British pound to 1.27, followed by the 1.2621 level.
As for the election risk, the Tory party should be able to add to their seats. However, polls have been bad at predicting what may happen, and there is a risk the Parliament gets more polarized with Lib Dem, and the Brexit Party grabbing seats from the Tories and Labor. However, GBPUSD is trading in a way that shows that the markets think that risks are declining.