Opinion Polls Continue to Influence Sentiment Towards the Pound
While the pound continued to profit yesterday from hopes the Conservatives can triumph with a parliamentary majority, the US dollar was left to contend with trade and central bank uncertainty. Contrasting fortunes that caused the GBP to US dollar rate to briefly touch an eight-month high, as it remained firmly above the 1.31 level.
Investors are confident of the election outlook and how it could signal the end of the Brexit paralysis. However, analysts still warn of uncertainties born out of the precedent set by previous polls that were wide of the mark in recent years. Most current political surveys have suggested the Conservatives hold a healthy lead, although some have indicated that Mr Johnson’s chance of winning a majority could be too close to call.
US-China Trade War Drags On
Despite Friday’s strong Non-Farm Payroll report for November, which demonstrated the resilience of the US economy during testing times and dampened expectations of a rate hike, the dollar was curtailed by events elsewhere. Most noticeably by concerns that US-China trade negotiations have stagnated, ahead of Christmas. “A deal that is implementable must be concrete and detailed, which I don’t think can be concluded within days of December 15,” said Shi Yinhong – an adviser to the Chinese government.
The final multilevel regression and post-stratification (MRP) poll from YouGov – perhaps the most credible political survey of the lot – is released at 10 pm this evening. Back in 2017, the MRP correctly predicted a hung parliament, following a string of inaccurate surveys that suggested the Conservatives were on course to achieve a majority. The previous YouGov MRP poll from this campaign, published in late November, predicted that Boris Johnson was on track to win a majority of 68 seats in parliament.
With markets still confident of a Conservative majority, any suggestion that Labour has narrowed the Tories lead, potentially forcing another hung parliament, could put the GBP vs USD rate under pressure.
The following economic figures hit the headlines today: UK Manufacturing Production, UK Industrial Production, UK GDP, US Nonfarm Productivity and US Unit Labour Costs.
Tomorrow sees the release of key inflation data from the US in the shape of the Consumer Price Index, before the Federal Reserve’s December monetary policy decision.
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