GBP/USD retreats modestly from eight month highs to the 1.3130 area

• Pound loses momentum after the latest poll ahead of Thursday’s election. 
• US dollar remains weak, correcting after rising sharply on Friday after NFP. 

The GBP/USD dropped from 1.3180 -the highest level since early April- to 1.3135 following the release of a new poll ahead of the general election in the United Kingdom. The bearish correction was modestly and as of writing, GBP/USD trades at 1.3155/60, up 20 pips for the day. 

Awaiting the election

The pair is rising on Monday but it remains limited under 1.3200. The pound continues to be supported by polls showing a big lead of the Conservative Party. A few minutes ago, the latest opinion poll by ICM showed Prime Minister Boris Johnson's Conservative Party unchanged at 42% while support for the Labour Party increased by 1 point to 36%. The Tori advance pushed the pound modestly to the downside across the board. 

The correction in GBP/USD was limited as volatility remains low and amid a weaker US dollar. After surging on Friday after the better-than-expected US jobs reports, today the greenback is correcting lower. The key event in the US will be the FOMC meeting on Wednesday. Analysts and traders are also focused on trade developments as the December 15 deadline for higher tariffs in the US to Chinese imports approaches. 

Technical outlook 

The pair holds a bullish tone but it is showing some short-term exhaustion signals after being unable to hold on top of 1.3160. Still the trend in the pair points clearly to the upside and a consolidation above 1.3180 would expose 1.3200. 

On the flip side, a break below 1.3110 would likely open the doors to a more significant correction. At 1.2980/1.3000 there is a strong barrier that will likely limit the downside. 

GBP/USD