The pound to US dollar rate was muted yesterday, despite a stream of early opinion polls predicting the Conservatives can achieve a majority, raising hopes that a Brexit deal can be ratified. The pound was shackled by disappointing construction Purchasing Manager’s Index (PMI) data, which showed that while output fell at a slower rate last month, both new orders and employment continued to slump. Business optimism within the sector is close to a seven-year low and civil engineering has dropped at its fastest pace since October 2009. While over in the US, new orders for factory goods suffered a steeper-than-expected fall in September, signalling weakness in manufacturing amid the ongoing US-China trade war.
Opinion poll data comes thick and fast
The pound’s fortunes against the US dollar could be heavily influenced by opinion polls in the run-up to the general election on 12th December. However, a lack of confidence in their ability to predict the political future – think Brexit and Trump – together with the sheer number of them published by various companies, can make it difficult to know which to trust.
YouGov is widely considered to be one of the most reliable, following the relative accuracy of its polling during the last election. So, the market research and data analytics firm’s latest figures for The Times were being closely monitored by the currency markets at the start of the week. YouGov confirmed a trend of growing support for Boris Johnson, taking the Conservatives to 37%, with Labour on 22% and the Liberal Democrats on 19%.
While the Conservatives currently hold a healthy lead, it’s far from certain whether this will translate into an overall majority following an election that pollsters are describing as the hardest to call in years. Tory HQ will, therefore, be treating these numbers with caution, after their fingers were burnt in 2017. Back then, Mrs May began the campaign with a seemingly unassailable lead, before ending up just two percentage points ahead of Labour and losing her overall majority.
We receive a raft of significant data from the US this afternoon: Trade Balance, Markit Services PMI and ISM Non-Manufacturing PMI. Federal Reserve Bank of New York President John Williams makes his latest speech tomorrow – the dollar might react to any mention of the US Central Bank’s latest stance on interest rates.
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