Election results imminent as markets remain volatile

12th December 2019 Market Update

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🇬🇧 GBP –  Yesterday saw no data releases for the UK, as sterling movement continues to be reactive to election polls which trigger traders to take their market positions. The expectation is that anything other than a Tory majority will cause the pound to fall sharply, however there could still be room for sterling to strengthen with a conservative majority.

Recent polls have indicated that the Labour party is closing the gap on the Conservative lead, which is likely to be the main cause of sterling weakness during late trading on Tuesday. More volatility can be expected as market moves start to take final positions in the lead up to the election outcome this evening

🇪🇺 EUR – Better than expected German economic sentiment figures helped the Euro to make gains against the US Dollar yesterday. The readings remain firmly in negative territory but it enabled the markets to see light at the end of the tunnel for the struggles faced by the Eurozone’s largest economy. Analysts do not expect the figures to significantly change the direction of the Euro-Dollar pair, however.

There are no economic releases for the Eurozone today which could hurt the single currency. Markets will move their focus on to Christine Lagarde’s first Interest Rate Decision as Head of the ECB on Thursday where the expectation is for rates to remain unchanged.

🇺🇸 USD –  A similar view that the Fed will not change interest rates meant that US Dollar moves were muted on Tuesday. The lack of data from the US combined with US-China trade talks remaining up in the air meant that the Greenback was stuck in wait-and-see mode after significant losses last week.

US economic data will begin today with inflation readings for November being published at 13:30. These are mostly expected to improve slightly across the different readings which could help the US Dollar to rally during the day. At 19:00, the main event of the day will get underway as markets will be looking for hints from the Fed of the continuation of their interest rate cut cycle in 2020 after previously stating that they are not expecting further adjustments in the coming months.

 

Summary:

GBP: Sterling falls on eve of election following poll release
EUR: Surprise sentiment figures helps the Euro
USD: Focus on Fed Interest Rate decision tonight

 

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Darren Kilner

Darren Kilner

Darren is Head of Dealing at FairFX. Darren lives and breaths FX, his Mastermind topics are G8 currencies and economic forecasts.

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