There was little debate about the impact of the first televised sparring session between the leaders of the Conservative and Labour parties on the pound to US dollar rate. The contest – described as a bore draw by one newspaper – only caused the pound to edge slightly lower against the dollar on Wednesday. The market reaction might have been more dramatic if Jeremy Corbyn had gained an advantage, but it wasn’t clear if either contestant had won or lost the debate. A snap YouGov poll in the immediate aftermath confirmed this, with 51% of polled viewers judging Johnson to have won the debate, against 49% for Corbyn. While bookmaker Betfair revealed that the implied odds of a Conservative majority remained unchanged at 65.8%.
Fed Confirms Future Rate Cuts Are Unlikely
The US dollar was in a buoyant mood yesterday after crude oil sold off and china-exposed stocks suffered a bout of volatility, before better-than-expected housing starts data demonstrated resilience in the domestic economy. But it was the release of the minutes from the US Federal Reserve’s October policy meeting that had the biggest impact. Fed policymakers generally agreed that they won’t need to cut interest rates again unless economic conditions change significantly. Most Federal Open Market Committee members saw last month’s cut as enough “to support the outlook of moderate growth, a strong labour market, and inflation near the Committee’s symmetric 2 per cent objective,” the meeting summary said.
The GBP vs USD rate will be waiting to see if Friday’s second televised debate – which will also include the Liberal Democrats and SNP this time around – can deliver a more conclusive result. Before then, we receive a slew of data from the US today, including the Philadelphia Fed Manufacturing Survey, Initial Jobless Claims and Existing Home Sales. Fed official Neel Kashkari also makes a speech, with dollar investors keen to hear more about the future of interest rates. Friday sees the release of yet more significant data from the US: Markit Manufacturing PMI, Markit Services PMI and the Michigan Consumer Sentiment Index.
A more sedate end to the week in the UK means today’s Public Sector Net Borrowing figures are the only release of note remaining on the calendar. If net borrowing is negative, it means UK accounts are surplus, which should be positive for the pound. While a deficit is generally unfavourable for the economy, meaning growth in net borrowing is considered as negative for the pound.
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.