The US dollar’s weakness offered a boost to emerging-market currencies and oil.
Victorious Boris Johnson
Finally, the victory of the Сonservative party under the leadership of Boris Johnson is confirmed. They have a 43.6% majority, while the Labour party follows with 32.4% and the Liberal Democrats got 11.4%.
Boris Johnson had previously commented he had a strong agenda for the United Kingdom should he win the election. One of the pillars of his plan was to “get Brexit done” at the soonest and in the best interest of the UK.
For the UK, it means higher stability and a better economic outlook with all the consequences.
For the world, it means stronger GBP against the related currencies.
All of that, of course, takes place if Mr. Johnson does not fail on his intentions.
GBP celebrating the victory
In the meantime, the British pound reacted immediately to the victory of Boris Johnson.
On the weekly chart, it is visible that the price of GBP/USD rose to the area of 1.35 – a height it has never been to since May 2018. And it is testing the August-2018-December-2019 resistance currently. Crossing this barrier would confirm the market’s intention to go even higher.
In the short term, however, we are expecting a certain correction downwards, as confirmed by the Awesome Oscillator. In any case, whether it is going further upwards now or later, the price would need to make a stop at the resistance it is testing now. On the hourly chart, the level of 1.3500 is going to be capping the bullish direction for a while, while 1.3450 will be the support. Crossing the support would mean a deeper correction downwards. Otherwise, we will observe a more sideways movement of the price.
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Poor US data, slow vaccine distribution, rising virus cases worsened the market sentiment and underpinned safe-haven currencies like the USD, and JPY.
The European Central Bank will publish the monetary policy statement with the interest rate decision on January 21, at 14:45 MT time.
Joe Biden is going to unveil a Covid-19 relief package of about $2 trillion. After this announcement, the 10-year Treasury yield rose, adding support for the USD.