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Election speculation lifted the pound to a peak of US$1.2986 versus the US dollar before the pair eased back slightly into the close. The pound ended Monday’s session 0.2% higher against the dollar in its fifth straight winning session. The pair is advancing again in early trade on Tuesday.
Election speculation and Brexit optimism sparked a rally in the pound at the beginning of the week. The pound jumped after Boris Johnson confirmed that all Conservative party candidates standing in the election in December backed his Brexit agreement. This means that if Boris Johnson wins a majority in the election, then his Brexit bill should comfortably receive the necessary support to pass quickly through Parliament, ensuring that the UK leaves the EU with a deal by the 31st January.
The latest polls are showing that the Conservatives have a comfortable lead. The pound is advancing as the chances of a damaging no deal Brexit or continued Brexit uncertainty diminish. Gains however, may be limited, even if the Conservatives win and the UK does secure a deal. The transition period is only 11 months to agree a trade deal with the EU, which is a very ambitious time frame. The reality is there is still a lot of uncertainty to come even with a Brexit deal.
Today pound investors will remain focus on UK elections. With the a live televised debate between Boris Johnson and Jeremy Corbyn. Should Jeremy Corbyn walk away from the debate with more support, the pound could decline.
Dollar Drops On Trade Outlook, Powell Meeting
The dollar fell across the session on Monday amid more mixed trade headlines and as Federal Reserve Chair Jerome Powell was summoned to the White House to talk to President Trump and Treasury Secretary Steven Mnuchin in an unannounced meeting. The trio discussed the economy, growth, employment trends and inflation. The meeting comes after President Trump has been unrelenting in his criticism of the the Federal Reserve and Jerome Powell for keeping interest rates too high and the dollar too strong. D
Today there is some mid-tier data in the form of housing starts and building permits that could boost the dollar. Investors are expecting both data sets due to rebound after weakness in October.
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| What do these figures mean? |
| When measuring the value of a pair of currencies, one set equals 1 unit and the other shows the current equivalent. As the market moves, the amount will vary from minute to minute.
For example, it could be written: 1 GBP = 1.28934 USD Here, £1 is equivalent to approximately $1.29. This specifically measures the pound’s worth against the dollar. If the US dollar amount increases in this pairing, it’s positive for the pound. Or, if you were looking at it the other way around: 1 USD = 0.77786 GBP In this example, $1 is equivalent to approximately £0.78. This measures the US dollar’s worth versus the British pound. If the sterling number gets larger, it’s good news for the dollar. |
