Pound retreats as Labour mounts comeback in opinion polls
Philip McHugh November 27th 2019 - 2 minute read
The pound fell on Tuesday, relinquishing some of Monday’s gains amid rising fears the upcoming election could result in a hung parliament.
Sterling appears to have stemmed its losses so far this morning though, with GBP/EUR flat at €1.1666, GBP/USD muted at $1.2845, and GBP/CAD rangebound at C$1.7045. GBP/AUD and GBP/NZD are holding steady at AU$1.8947 and NZ$1.9979 respectively.
The US dollar will be in focus today, and the currency may face some headwinds with the release of the latest US durable good order figures.
What’s been happening?
The pound found itself on the back foot yesterday as UK opinion polls showed Labour catching up with the Conservatives.
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.
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.
Meanwhile, the US dollar firmed during yesterday’s session as scepticism over whether the US and China are close to signing off on a ‘phase 1’ trade deal buoyed demand for the safe-haven currency.
What’s coming up?
Looking ahead, the US dollar may experience the most movement today with the publication of the latest US durable goods data.
Economists forecast that goods orders will have contracted for a second consecutive month in October, stoking concerns about the state of the US manufacturing sector.
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.
Finally, the ECB will remain in the spotlight, 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.