- A controversial result in the US election boosted the USD and put heavy pressure on GBP / USD.
- Some signs of stability weighed on the safe-haven USD and offered some support to the pair.
- The uncertain political situation in the United States could limit any significant positive movement for the pair.
The pair GBP / USD has recovered around 130 pips from daily lows, although he seems to be having a hard time seize momentum above the 1.3050 level.
After having witnessed an abrupt intraday course reversal of more than 200 pips from two-week highs, the pair has managed to find decent support above the 1.2900 level amid a modest pullback in the US dollar. The first results of the US elections have indicated a tighter race than expected by the White House and they have forced investors to adjust their portfolios, which in turn has provided a strong boost to the USD.
As volatility has decreased, some signs of initial stability in the financial market have pushed some monetary flows away from the safe haven USD, which has been seen as a key factor for the support of the GBP / USD pair. However, the fact that the vote count continues in key states on the battlefield, coupled with Trump’s intention to challenge the current count, could continue to fuel uncertainty for weeks to come.
This should support the USD as a safe haven and limit the strong gains of the GBP / USD pair.. So any subsequent bullish moves are likely to remain limited and risk fading rather quickly, warranting some caution for aggressive bulls before positioning for any further bullish moves.
At the beginning of the American session, investors could focus their attention on the economic calendar in the United States, where the publication of the ADP report on private sector employment and the ISM services PMI stands out. The data is likely to be overshadowed by US political events.
Credits: Forex Street
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