Pound pressured as Labour close the gap
Philip McHugh November 27th 2019 - 2 minute read
- Sterling gives up gains as Conservative lead narrows
- Weak US durable goods orders to weigh on the Dollar
- Euro struggling to find momentum
Pound retreats as Labour mounts comeback in opinion polls
The pound fell on Tuesday, relinquishing some of Monday’s gains amid rising fears the upcoming election could result in a hung parliament.
The latest polls revealed the Tories currently hold an 11-point lead over Labour, a significant fall from the 18-point lead they commanded at the same point last week.
This drove Sterling lower as it stoked fears the UK could end up with a hung parliament when voters go to the polls next month, a result which would only cast further uncertainty over Brexit.
In the absence of any UK economic data, GBP investors will keep a close eye on UK polls today, potentially leading to further weakness if the Tory lead continues to be eroded by Labour.
Will the US dollar fall as durable goods orders disappoint?
The US dollar remained largely muted against a handful of currencies on Tuesday as a White House adviser revealed a US-China trade deal was close. However, it was noted that three of the largest sticking points remained.
Added to this, data revealed consumer confidence fell for the fourth consecutive month in November. Dollar movement was also limited as trading slowed ahead of Thursday’s US Thanksgiving holiday.
Looking ahead, the dollar could slump following the release of October’s durable goods orders report if it shows the -0.7% decline in orders expected.
Dovish ECB chatter weighs on euro
The euro struggled to find momentum on Tuesday as the single currency was undermined by some dovish chatter from the European Central Bank (ECB).
ECB policymaker Francois Villeroy de Galhau reiterated the bank’s commitment to low interest rates as it seeks to tackle slowing growth and weak inflation.
The ECB will remain in the spotlight today, with EUR investors looking to a speech by the bank’s chief economist Philip Lane for any hints of how the ECB may shape monetary policy in 2020.
13:30 USD Durable Goods Orders
13:30 USD GDP Growth Rate (Q3)