Conservatives on Course to Secure a Majority on 12 December
The pound began the new week on a firm footing, thanks to favourable election developments over the weekend. Fresh polling data confirmed Boris Johnson remains on course to secure a majority at the halfway point of the UK’s general election campaign period – a poll-of-polls in The Telegraph suggested the Conservatives are set to achieve a 64-seat parliamentary majority. While the implied odds of a Conservative majority now stand at 70% according to the Betfair Exchange – up from 45% two weeks ago, before Brexit Party leader Nigel Farage announced he won’t be fielding candidates in Conservative-held seats.
If that wasn’t enough good news for one weekend, the launch of the Tory election manifesto on Sunday gave the pound even more reason for cheer. Unlike the party’s 2017 declaration of political intent, which contained some rather head-scratching policies, this focuses on the campaign’s central message: to “get Brexit done.” The pound vs us dollar rate subsequently snuck back over the 1.29 level yesterday – climbing above 10-day lows.
Fed Set to Hold Interest Rates Steady
Jerome Powell struck an upbeat tone overnight, in a speech he delivered in Providence, Rhode Island. The US Federal Reserve Chairman said that the central bank is “strongly committed” to maintaining its 2% inflation goal. His comments provided further indication that the central bank is unlikely to raise rates soon.
The Chicago Fed National Activity Index (CFNAI) slowed further in October, recording -0.71 and missing the consensus forecast. The CFNAI, released by the Federal Reserve Bank of Chicago, is a monthly index designed to gauge overall economic activity and related inflationary pressure. Production-related indicators weighed heavily on the index, due largely to industrial production falling by 0.8% in October having declined by 0.3% in September. Disappointing data could result in the US Federal Reserve changing their stance on interest rates, which would put the dollar under pressure.
The next two live election debates take place on Thursday and Friday. Investors in the pound will be watching intently to see which leaders capture the publics imagination. Before then, we receive a raft of US economic data on Wednesday and Thursday, including Nondefense Capital Goods Orders Excluding Aircraft and Gross Domestic Product Annualized numbers.
If you would like to learn more about factors influencing GBP/USD exchange rates for an upcoming currency transfer, feel free to contact myself, Jonathan Watson, using the form below.