Pound Higher As U.K. Awaits December Election

The pound strengthened against its major counterparts in the European session on Wednesday, as U.K. lawmakers approved a legislation to hold a snap election in December in a bid to resolve the Brexit impasse.

The legislation was passed by 438 to 20 votes in the House of Commons on Tuesday.

The bill will be headed to the House of Lords on Wednesday, although they are expected to be unopposed to the PM’s Brexit plan.

House of Commons leader Jacob Rees-Mogg said that the Parliament would be dissolved on November 6. Election will be held on December 12.

Prime Minister Boris Johnson believes that the vote would resolve the current stalemate in Parliament, enabling him to push through his Brexit plan.

Data from the British Retail Consortium showed that UK shop prices fell for the fifth consecutive month in October.

The BRC-Nielsen shop price index dropped 0.4 percent year-on-year in October due to continuing decline in non-food prices.

The currency held steady against its major opponents in the Asian session.

The pound advanced to a session’s high of 1.2905 versus the greenback, from a low of 1.2858 seen at 10:45 pm ET. Next key resistance for the pound is seen around the 1.30 level.

After a brief fall to 139.96 against the yen at 8:30 pm ET, the pound rose to 140.48. The pound is seen finding resistance around the 142.5 level.

Data from the Ministry of Economy, Trade and Industry showed that Japan retail sales climbed 9.1 percent on year in September – exceeding expectations for an increase of 6.0 percent following the 1.8 percent gain in August.

On a seasonally adjusted monthly basis, retail sales spiked 7.1 percent – again topping expectations for 3.5 percent and up from 4.6 percent in the previous month.

The pound edged higher to 1.2809 against the franc, from Tuesday’s closing value of 1.2789. On the upside, 1.30 is likely seen as its next resistance level.

Following a decline to 0.8640 at 7:00 pm ET, the pound gained to 0.8618 against its European counterpart. The currency may possibly challenge resistance around the 0.84 level, if it rises further.

Data from the Federal Employment Agency showed that German unemployment increased and the jobless rate remained unchanged in October.

The number of unemployed increased by a seasonally adjusted 6,000 after falling 9,000 in September. Economists had forecast a monthly rise of 3,000.

Looking ahead, U.S. ADP private payrolls data for October is scheduled for release at 8:15 am ET.

The U.S. GDP data for the third quarter is due out in the New York session.

German flash inflation data for October will be published at 9:00 am ET.

At 10:00 am ET, the Bank of Canada announces its interest rate decision. Economists widely expect the central bank to maintain the benchmark rate at 1.75 percent.

At 2:00 pm ET, the Fed announces its decision on interest rates. Economists widely expect the Fed to cut federal funds rate to between 1.50 percent and 1.75 percent.

The material has been provided by InstaForex Company – www.instaforex.com