UK election on Thursday could bring a new round of volatility | 04 July 2024

Event to pay attention to today:

GBP - Parliamentary Elections

GBPUSD:

The pound/dollar exchange rate continued its short-term recovery on Wednesday, with a general softening of US economic data in the mid-week market session providing support. The upcoming UK election on Thursday will attract a great deal of attention from traders, while US markets will be focused on the anticipation of a day off on Thursday.

The US employment change from ADP fell to 150k in June, down from the previous month's 157k and below the projected increase to 160k. A closer examination of the ADP report revealed that many of the jobs that had already been lost were concentrated in the low-paying leisure and hospitality sectors.

The number of individuals filing initial jobless claims in the United States for the week ending 28 June increased to 238,000 from 233,000 the previous week, exceeding the projected figure of 235,000. The four-week average of initial jobless claims also rose to 238,500 from 236,250.

The US ISM Services Purchasing Managers' Index (PMI) declined sharply in June, reaching its lowest level since June 2020. The services PMI fell from the previous month to 53.8, exceeding forecasts for a decline to 52.5.

On Thursday, US markets will be closed due to US Independence Day celebrations, while parliamentary elections will begin in the UK. The Labour Party in the UK is expected to secure a majority in government, marking the end of the Conservatives' 14-year rule. According to the latest mega poll released on Wednesday, Labour is expected to be well ahead of the Conservatives, with Keir Starmer, the Labour Party's candidate, expected to replace Rishi Sunak, the current Conservative Prime Minister. A poll conducted by YouGov indicates that Labour is projected to win 431 seats, while the Tories are expected to win just 102 seats.

Trading recommendation: We follow the level of 1.2770, if we consolidate above, we take Buy positions, if we rebound, we take Sell positions.

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