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Whilst Monday saw the pound jump on UK election hopes, yesterday saw the pound tumble on election concerns. The pound declined versus its peers across the board, including against the US dollar. The pound US dollar exchange rate dropped to a 12 day low of US$1.2836. The pair is has dropped 0.3% in early trade on Wednesday.
The pound slipped in the previous session as the latest polls showed that the Conservative party’s lead was narrowing ahead of the general election in just over two weeks time.
The pound has rallied over the past few weeks as investors became increasingly optimistic that the Conservatives would win the general election and with a majority. Conservative candidates have pledged their support to Boris Johnson’s Brexit bill. A win by the Conservatives, with a majority would be the most believable way for the Brexit bill to be quickly pushed through Parliament and Brexit achieved, with a deal by 31st January.
Kantar’s poll showed that the Conservatives have 43% whilst Labour has 31%. However, another poll by ICM/Reuters showed that the Conservatives have 41% and Labour 34%.
If no party wins by a clear majority and the UK has a hung Parliament, the Brexit uncertainty that has dragged on the UK economy over the past three and a half years, could continue well into next year.
Today there is no high impacting UK economic data. Investors will remain fixated on election developments and the polls.
Dollar Investors Await A Barrage Of Data
The dollar traded within familiar levels on Tuesday, easing back from its high in the US session following worst than expected US consumer confidence figures.
Data released by the Conference Board showed that consumer confidence slipped for a fourth straight month in November, raising questions over the strength of the US economy heading to wards the end of the year. The consumer confidence index dipped to 125.5, down from 126.1 in October and below forecasts of 127. Falling consumer sentiment doesn’t bode well for consumer spending. However, on a historical level, November’s statistics are still strong suggesting that investors don’t have too much to worry about.
Today is the final full day of trading prior to the Thanksgiving holiday. There is plenty of data for investors to digest. US GDP, inflation and durable goods will be the most closely watched. Any sign of weakens could weigh on demand for the dollar.
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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. |
