02 Dec 2019
The EUR/USD holds above the 1.10 mark, amid doubts regarding Chancellor Merkel's government. The European Central Bank President Christine Lagarde as well as the U.S. ISM Manufacturing PMI are on the docket.
The pair has experienced a downtrend, shown by the four-hour chart, as it trades below the 50, 100, and 200 Simple Moving Averages. Traders hope to see new sales on Monday during Cyber Monday.
Germany is set to face some political instability, potentially pushing Chancellor Angela Merkel to retire earlier than expected. Merkel has been Europe’s beacon of stability. The SPD has been voted to replace Merkel.
The party’s left-wing Norbert Walter-Borjans and Saskia Esken will also succeed Olaf Scholz and Klara Geywitz, triggering policy changes that were previously refused by Merkel. The "Schwarze Null" policy could be changed would help the euro, allowing it to add stimulus without being pressured by the European Central Bank.
On the other hand, the Cable holds its place over the 1.29 handle. Recent election polls by BMG highlighted a closer gap between the Conservatives and Labour, ahead of the UK general election on December 12th.
Johnson and Corbyn’s sides are only 6 points apart. A Conservative win would be more beneficial for the markets, as it would allow Prime Minister Boris Johnson to authorise market-friendly policies and conclude the Brexit deal with the EU.
Manufacturing PMI exceeded forecasts with 48.9 points, despite remaining below the 50-point threshold.
Furthermore, U.S. President Donald Trump will be visiting the UK.