Cable up to session highs of 1.2873
Cable gets a solid lift on the day as price now challenges the key hourly moving averages with the 100-hour MA (red line) @ 1.2856 being tested now after Jeremy Corbyn confirmed that a December election is on.
It is being reported that Labour expects an election date between 9 and 12 December but at this stage, the date is secondary. The fact that they are full-on backing an early election is enough for the proposed bill later to pass.
However, is that really good news for the pound?
On the one hand, it means that we are potentially a step closer to ending the Brexit impasse. Early polls suggest that Johnson is favoured but then again, so was Theresa May back in 2017 and that is a story that needs reminding.
As such, it isn't going to be plain sailing for the pound from hereon with election uncertainty set to prevail all the way until the day of the polls.
I will repeat this same analogy that I mentioned last week:
"I've been getting several queries about why an election is pound-negative even if Johnson looks likely to win one. In my view, the answer lies in that statement itself.Likely is not the same as certainly. And a lot can happen between now and voting day, so as long as there is some degree of uncertainty, it changes the perception.Imagine someone offering you $50 but you have to draw a random lot to get it. Among the lots drawn, there is a 5% chance of you having to pay $200 instead of receiving $50. Now, is that a risk worth taking?"
