Labour Advance in Opinion Polls
Another Monday morning in the election campaign period and another raft of opinion polls for the pound to digest. Of the ten data analytics companies that are monitoring the public’s voting intentions ahead of the election, nine indicated Labour have increased their share of support. For example, Kantar showed an increase of 5% for Labour, Ipsos MORI 4% and the high-profile YouGov series 2%. The pound v dollar rate didn’t take kindly to the latest election forecasts, as the chances of another hung parliament gathered pace.
The pound was further hampered by the UK manufacturing sector yesterday morning, which shrank for the seventh straight month in November, causing industry bosses to cut jobs at the fastest pace since 2012. It received a welcome boost overnight, however, from the latest Black Friday inspired BRC-KPMG sales figures, which registered an increase in sales during November.
US Manufacturing Activity Continued to Lag in November
The ISM Manufacturing Index revealed the US remains in contraction territory, after registering 48.1 in November, down from 48.3 in October and below market expectations of 49.4 – a reading under 50 represents a reduction in size for the sector. Inventories and new orders recorded notable weakness, while employment also suffered. These disappointing figures dealt a blow to the US dollar.
The Confederation of British Industry (CBI) has forecast the UK economy will strengthen in the coming years, provided Brexit uncertainty is resolved. According to the CBI, the economy will gather pace by 2021 if headwinds from Brexit are lifted. The trade body for the British business sector is predicting “modest” GDP growth, which could reach 1.8% by 2021, after an expansion of just 1.3% this year and 1.2% in 2020.
The CBI figures are based on the “assumption that Britain leaves the EU by January 31 next year and has a clear line of sight to an ambitious trade deal” and that a deal should involve “alignment with EU rules where essential for frictionless trade”. However, if Brexit remains unresolved and uncertainty persists next year, followed by a no-deal in 2021, the CBI predicts economic growth could be as low as 0.4%.
The pound must wait until tomorrow for any economic data that could give it a nudge in either direction, when the Markit Services PMI figures for November are released.
While the dollar waits for developments in the trade war with China, it will be keeping a close eye on tomorrow’s ISM Non-Manufacturing PMI.
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