USD Embraces a Bull Market in May

GBP saw a rise candlestick pattern that was almost a Doji without subjective to a risky monthly trading chart when April concluded. Its previous increase was partially offset because of its plummet caused by the rapid growth of USD. Great importance should be attached to GBP in May because of the ‘super Thursday’ this week when the Bank of England (BOE) will convene the meeting, and local elections and the parliamentary election will be held in England and Scotland respectively, apart from a seasonal plunge in May encountered by GBP over the past decade.

Throughout the current situation, BOE may keep present monetary policies that are not dovish nor hawkish. As for local elections, it is London mayoral election that draws much attention. The popularity of Shaun Bailey, Conservative Party candidate, is relatively lower than that of Sadiq Khan, incumbent mayor from the Labour Party. In addition, the Labour Party generally surpasses its Conservative counterpart in other local elections. As such, it is believed that Prime Minister Johnson will be forced out of office again, which will give rise to political chaos in the U.K., if Conservative Party loses the election this time.

Speaking of the Scottish parliamentary election, the Scottish National Party (SNP) will enjoy a landslide victory, given no accidents, and the independence referendum will be put on the agenda again. The advent of political confusion will be highly possible as SNP is believed to make up its mind to hold this referendum in autumn, neglecting the British governments objection, even if the U.K. is estimated to absolutely disagree with this campaign. The British administration will not agree with the impending outcome on one hand, and the Scottish Parliament will promote the process of independence based on the related law on the other hand. It is estimated that the aforementioned situation will crash into GBP whose trend is thereby threatened by serious hidden risks. Some people from Hong Kong with the actual demand for GBP are recommended to think twice, making their decisions on purchases in line with the post-election situations after this Thursday.

In most cases, GBP bears witness to the decline in May whereas DXY or USD/non-American currencies often become strong in this month. DXY and USD/GBP enjoyed the increase for 8 times mixed with the decrease for 2 times in May over the past decade. Therefore, under the climate of the strong USD in most cases, its non-American counterparts or forex products are usually weak in May. Here comes a question: Is the strong USD caused by weak non-American currencies or vice versa？ No answer can be found at present. With regard to the reasons for the strong USD in May, I will try to unveil them in my forthcoming articles.