US-China Trade Deal May Have to Wait Until After the 2020 Us Election
The GBP vs USD rate edged above the 1.30 level yesterday, for the first time in over 18 months, after the dollar took a tumble. The catalyst was Donald Trump, who warned that a trade deal with China could be over than a year off. The President used the NATO summit in London to tell the world that the US was doing “very well” from the trade war and that he’s in no rush to sign an agreement before the presidential election next November. “In some ways, it’s better to wait until after the election for the China deal. But they want to make a deal now,” he said. The comments came hot on the heels of Monday’s disappointing ISM Manufacturing Index from the US, which revealed the sector remains in contraction territory.
UK Construction Sector Continues to Struggle
News that the UK construction sector remained in contraction territory in November couldn’t redress the balance, such was the impact of Mr Trump’s comments on the pound sterling to USD rate. The Markit/CIPS construction purchasing managers’ index ticked up from 44.2 in October to 45.3, exceeding expectations and signalling the slowest drop in overall construction output for four months. Unfortunately, it remained below 50.0 – the level which separates contraction from expansion in the sector – amid Brexit and election fuelled uncertainty.
Nor could yet another opinion poll that suggests Labour is chasing down the Conservatives lead in the race for Number 10. According to the New Statesmen ‘Britain Elects’ poll tracker, support for the Tories has fallen by 0.4% to 42.4%, while support for Labour has risen by 2.1% to 31.8%. This indicates the gap between the two parties now stands at 10.6%. Traditionally, a party requires a 10% lead to achieve a majority in parliament. Could we be heading for another hung parliament and yet more Brexit uncertainty?
Today sees the release of the Markit Services PMI from the UK. Over in the US, we have the ADP Employment Change figures, Markit Services PMI and ISM Non-Manufacturing PMI. Later in the day, Randal Keith Quarles – a member and vice-chair of the Federal Reserve Board of Governors – gives his latest speech. Investors in the dollar will keep an ear out for any mention of monetary policy.
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