Pound fluctuates as UK politics remains in focus

The pound recorded some short lived gains yesterday as polling data continued to favour the Conservative party in the upcoming election.

Sterling is struggling to recoup these gains this morning, with GBP/EUR stuck at €1.1677, GBP/USD muted at $1.2917, and GBP/CAD flat at C$1.7148. GBP/AUD and GBP/NZD are holding steady at AU$1.9026 and NZ$2.0147 respectively.

Currency traders will be kept busy today with the publication of the UK’s and Eurozone’s latest PMI figures as well as Christine Lagarde’s first speech as European Central Bank (ECB) President.

What’s been happening?

The pound trended higher on Thursday as markets welcomed polling data indicating the Conservatives continue to retain their commanding lead over Labour.

This is despite Jeremy Corbyn vowing to ‘transform’ the UK as he launched Labour’s election manifesto.
However, Sterling was unable to sustain these gains and ultimately closed the European session virtually unchanged from its opening rate.

Meanwhile, the US dollar was undermined on Thursday by renewed risk appetite in the wake of reports suggesting the US may delay planned tariffs against China.

This prevented the ‘greenback’ from capitalising on a stronger-than-expected Philadelphia manufacturing index published yesterday afternoon.

The euro also struggled to find support yesterday as the Eurozone’s latest consumer confidence index showed consumers remain mostly pessimistic in their outlook in November.

What’s coming up?

Top of the agenda today is the publication of the UK and Eurozone PMI flashes.

In the UK these figures are expected to show that the private sector stagnated again this month, likely weighing on the pound as it raises questions about the state of domestic growth in the fourth quarter.

The Eurozone PMIs are likely to prove equally gloomy, with the bloc’s manufacturing sector forecast to report its tenth consecutive month of contraction in November.

However, Christine Lagarde’s speech may be of more interest to EUR investors as they look for any hints on how her tenure may shape the bank’s monetary policy.

Closing out the week will be the publication of the latest US consumer sentiment index, where confirmation of a modest improvement in sentiment could lend some support to the US dollar.