*GBPUSD gained 0.6%, the highest Since May 8.
*US future indices rebounded after a positive comment about Phase-one deal between US and China.
Sterling successfully broke 1.30, which was the major resistance in the short-term. The rally is supported by the conservative lead (see the chart below) and the increasing probability of a decisive majority in next week’s parliamentary election. GBPUSD’s recent advance came with a decline in its 1-month option volatility and this keeps the bullish sentiment persisting toward 1.32 if the market holds above 1.2980.
The polls are favoring the Conservative Party:
GBPUSD Rally with a declining 1-month option volatility
EURGBP slumped below the last May’s low of 0.85, driven by optimism among market players for an orderly Brexit by the end of January 2020. Technically speaking, closing below 0.85 would give further possibility for the continuation of the recent selloff and push the prices toward 0.83 and 0.83.
US futures contracts are pointing higher after significant decline over the past two days, driven by recovering confidence after US officials stated US and China are moving closer to a phase-one trade deal.
However, recent moves indicate the future may not be as rosy as investors may think. The risks of earlier this year still persist: Brexit, the trade war, and a potential global economic slowdown.
Uncertainty is now the new norm for the last month of the current year. The VIX index (known as the ‘fear index’ - see the chart below) rebounded from its lowest level this year.
However, markets are still buying the dips of any main American index. Dow Jones found a buying interest near the level support at 27,320, so it appears the industrial index to be on track to test the psychological resistance at 28,000.
VIX rebounded from its lowest level