Pound Profits from Election Optimism
The pound gained momentum over the weekend, following the release of yet more polls that showed the Conservative Party maintained a solid lead over the opposition. For example, polls in the Sunday Times and the Mail on Sunday placed the Conservatives on 45% of the vote, with Labour lagging on 28-30% of the vote.
Prime Minister Boris Johnson accelerated the pound’s upward trajectory, by claiming that all his party’s parliamentary candidates have committed to vote for his Brexit deal if he wins a majority. Mr Johnson told the Sunday Telegraph that: “All 635 Conservative candidates standing at this election – every single one of them – has pledged to me that if elected they will vote in parliament to pass my Brexit deal so we can end the uncertainty and finally leave the EU.” The GBPUSD rate subsequently raced to a 17-day high; remaining above the 1.29 level on the back of mounting hopes the Brexit deadlock can be broken swiftly.
Tariffs Prove Sticking Point in Us-China Trade Talks
Support for the pound to US dollar rate didn’t end there as the week got underway. Rather than being buoyed by reports from China that trade talks with the US were progressing well, dollar investors preferred to concentrate on Trump’s reluctance to roll back tariffs, sending it lower against the pound.
Weak Us Data Fails to Lend the Dollar a Helping Hand
If the dollar was hoping for an injection of optimism from the NAHB/Wells Fargo Housing Market Index, it was left sorely disappointed yesterday afternoon. After reporting a surprise improvement in US homebuilder confidence in the previous month, the National Association of Home Builders latest report revealed that confidence had edged slightly lower in November.
US Building Permits and Housing Starts figures are released this afternoon, but it’s tomorrow’s Federal Open Market Committee (FOMC) meeting minutes that will impact the pound to US dollar rate the most. The contents of which will tell us how accurate Jerome Powell’s testimony to Congress was last week. Particularly regarding interest rates, which the US Federal Reserve Chair said would remain unchanged in the coming months.
Tomorrow’s UK Inflation Report Hearings will impact sentiment towards the pound. Falling prices are good news for consumers in the run-up to Christmas – especially as wage growth is dropping – but may send sterling lower.
If you would like to learn more about factors influencing GBPUSD exchange rates for an upcoming currency transfer, feel free to contact myself, Jonathan Watson, using the form below.