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Varying opinion polls result in Sterling volatility

26th November 2019 Market Update

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🇬🇧 GBP –  Yesterday afternoon GBP accelerated against its major currency pairs as it was revealed that the implied odds of a Conservative majority has risen from 45% to 70% in a couple of weeks. These figures were publicised by the Betfair Exchange and the Telegraph put together a combined poll which calculated The Conservative party having a 64-seat parliament majority.

Some of the pound’s gains were quickly reversed as an ICM/Reuters poll was released later in the afternoon showing Labour at 34% and the Tories at 41%. This was the closest the 2 parties have been in the build up to the election. In addition to this, a Kantar poll this morning showed the gap has tightened, since their last poll, with the Conservatives down 2 points and Labour up by 5 points.

🇪🇺 EUR – Yesterday morning the German IFO business climate Index was released at 95 in line with the forecasted figure. This was significantly above October’s figure of 84.6, however, it had little impact on the Euro.

🇺🇸 USD –  The Greenback had a positive day yesterday appreciating against most of its rival currencies and the US dollar index rallied to a 2-week high. This strengthening was influenced by reports that phase one of a trade deal is very close to being complete. EUR/USD continued it’s 4 day losing streak dropping to a 2-week low.

Jerome Powell signalled that interest rates are unlikely to rise until inflation is over its 2% target level. He commented that manufacturing figures have also been disappointing, however, there are many positives for the US economy such as household spending.

At 2pm the US Housing Price Index and S&P/Case-Shiller Home Price Indices are released and at 3pm US Consumer Confidence and US New Home Sales are released.

 

Summary:

GBP: Odds of Tory Majority Rise
EUR: Very little news from the Eurozone
USD: Powell signals interest rates unlikely to rise


 

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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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