- US election result is still unclear.
- UK economy heading for a double-dip recession’.
- GBP/USD driven by US dollar volatility.
The US election outcome remains uncertain as votes continue to be counted. Currently former vice president and Democrat Joe Biden is in the lead although Trump has already said that he would take it to the Supreme Court. The US dollar saw choppy trading in a one-point range today as sentiment jumped from Biden to Trump and back again. USD-pairs are at risk of more volatile moves.
The Pound took a hit earlier after final Markit PMIs revealed that the recovery in the UK service sector slowed sharply in October. The dominant UK service sector was almost stalling even before the second lockdown. The chances of a double dip recession has increased substantially.
Tomorrow the Bank of England quarterly inflation report and monetary policy report are awaited. The central bank is expected to announce an increase in the UK bond-buying program (QE) of up to GBP100 billion with the national lockdown likely to force the central bank’s hand.
Brexit talks are likely to continue over the weekend, amid reports of progress. More work needs to be done but the fact they are talking is a good sign.
GBP/USD is currently trading around 1.3000 after easing back from a high of 1.3142 and up from a low of 1.2912 in today’s session. US Dollar volatility is the main driver. It would be best to stay on the sidelines until the US election results are known.