31th October 2019 Market Update
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🇬🇧 GBP – Sterling moves were very muted as the market sat back to digest the potential moves on the pound leading up to the election. The pound finished pretty much closed at the same level as where it opened.
Current polls show Boris Johnson in a ten-point lead, with his Conservative party out ahead on 35%, the Labour party on 25%, the Liberal Democrats on 18%, and the Brexit party on 11%.
No significant data out today.
🇪🇺 EUR – The European Commission’s economic sentiment indicator released yesterday revealed that economic confidence hit its lowest level since 2015 adding to the continuing negative sentiment on the health of the European economy. According to the Economist Intelligence unit, at least three countries are at risk of recession by the end of the year; Germany, Italy and Finland.
Today could be a bit more interesting with inflation figures for October (forecasted 0.7%), third quarter growth estimates (0.1% expected versus 0.2% in the second quarter) and the latest unemployment rate, expected to remain at 7.4%.
🇺🇸 USD – The dollar received a very short-lived boost in the afternoon after GDP expanded faster than expected at 1.9% between July and September but slower than the 2% growth between April and June. ADP payrolls were also released showing 125,000 jobs were added in October versus an expected 120,000.
In the evening the Fed cut interest rates as expected from 2% to 1.75%, the third time in four months. However, the working in the accompanying statement changed with the bank implying that they would hold off on further rate cuts. Fed Chair suggested the “policy is well-positioned” and that risks to the economy have subsided with no further cuts expected by the bank unless conditions worsen.
The dollar rose sharply following the announcement, but the gains were short lived with the dollar index dropping sharply across the board as markets seemed to still consider a further rate cut could come in December.
Today sees the release of personal consumption inflation figures expected to drop marginally to 1.7%
GBP: Tories have 10 point lead in polls
EUR: Thinktank suggest three economies due to go into recession
USD: Fed cuts rates and dollar continues to weaken
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