 |
The pound bounced off a low of US$1.2910 in the US session on Tuesday to close down 0.2% at US$1.2927. The pair is edging lower in early trade on Wednesday.
The pound picked up off session lows ahead of the live televised debate between Boris Johnson and leader of the Labour party Jeremy Corbyn. Following the debate 51% supported Boris Johnson as the winner of the debate, whilst 49% saw Jeremy Corbyn as the winner. The results suggest that Corbyn is catching up with Johnson. Prior to the head to head debate a poll showed that Boris Johnson had a sold 18 point lead over the opposition party leader Jeremy Corbyn. Investors will be watching closely to see if this figure declines.
Growing optimism that the Tories will secure a solid majority in the election, helping the UK to avoid a no deal Brexit has lifted the pound. However, weakness is starting to seep in as investors look beyond 31st January to the 11-month transition period during which the UK will attempt to negotiate a trade deal with the EU. Uncertainty by no means ends of 31st o January.
A moderately improved Confederation of British Industry (CBI) Industrial trends index failed to boost the mood towards the pound. The CBI index printed at -26, up from -37. Concerns over the health of the British economy amid ongoing Brexit uncertainty have dragged on the pound. Whilst the UK has avoided a recession so far, the services sector has stagnated a contraction in the fourth quarter is still a possibility.
All Eyes On The FOMC Minutes
The dollar traded flat in the previous session amid growing scepticism that a US — China trade deal would get done. Mixed messages on an almost daily basis give traders cause for direction a various levels of risk appetite. Amid the mixed signals over trade the dollar has lost its way. The US Senate passing a bill supporting pro-Democracy protesters in Hong Kong will aggravate tensions between China and US. Te safe haven dollar is advancing today.
Today investors will look ahead to the release of the minutes from t he Federal Reserve monetary policy meeting on 30th October. Investors will be keen to see the deliberations that lead to the Fed cutting interest rates for a third time this year, whilst also indicating that it will press pause on the cutting cycle. The minutes come following Federal Reserve Chair Jerome Powell’s appearance before Congress, so they could already be considered slightly outdated.
| 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. |
|
