With the US markets closed for holiday, attention has been focused on the UK

Round-up

With the US markets closed for holiday, attention has been focused on the UK elections, with exit polls coming in line with what markets were expecting – a Labour Party’s landslide victory. The polls points to Labour winning 410 seats out of 650, with the Conservatives on 131, and given its historical accuracy with the official results, the stage is likely set for an end to the Conservatives’ grip on power.

The no-surprise outcome may see an edge higher for the FTSE 100 and the GBP/USD given the greater political clarity, but thereafter, markets should shift more focus towards the overall economic conditions and monetary policy outlook to drive further moves.

Aside, the European Central Bank (ECB) minutes were also eyed overnight, with policymakers revealing some reservations over last month’s rate cut, supporting views that it is nothing more than a follow-through of previous commitment. More wait-and-see is set to continue, with a no-change in policy guided for the July meeting but September remains a likely timeline given softer economic data.

GBP/USD eyeing retest of key horizontal resistance

The no-surprise outcome saw the GBP/USD with relatively subdued moves, having ticked up close to 1% this week. Having seemingly traded on higher lows since October last year, the pair seems to be eyeing for a retest of the 1.282 level, where the key horizontal level has served as resistance on at least three previous occasions. An upward bias is presented for now, with a bullish crossover on its daily moving average convergence/divergence (MACD) and a move in its daily relative strength index (RSI) back above its mid-line.

Any move above the 1.282 level could signal buyers taking on greater control, which may leave its July 2023 high at the 1.312 level on watch next. On the downside, immediate support may be found at the 1.261 level. Greater cues are likely to revolve around the US non-farm payrolls released later today.