Pound dented by political uncertainty
Philip McHugh November 29th 2019 - 2 minute read
The pound was left on the back foot yesterday as cheer over YouGov’s MRP poll gave way to political jitters as the day went on.
Sterling appears to have stabilised again this morning however, with GBP/EUR flat at €1.1725, GBP/USD rangebound at $1.2910, and GBP/CAD muted at C$1.7146. GBP/AUD and GBP/NZD are holding steady at AU$1.9046 and NZ$2.0077 respectively.
Looking ahead, the focus today will be on the euro, with the publication of the Eurozone’s latest inflation figures potentially limiting the appeal of the single currency.
What’s been happening?
The pound softened on Thursday, relinquishing some of the gains made mid-week as markets took some time to digest the latest polling figures.
Sterling’s dip came as analysts warned that there is still everything to play for in the upcoming election and that we should take YouGov’s MRP poll predicting a large Conservative majority with a pinch of salt.
The pound was also undermined by some profit taking, having leapt to multi-month highs on Wednesday.
The euro struggled to find momentum yesterday as its attempts to advance were undermined by Germany’s consumer price index, which showed a decline in monthly consumer price pressures.
Meanwhile, the closure of US markets for Thanksgiving created thin trading conditions for the US dollar, leading it to only see modest gains despite renewed US-China tensions stoking demand for safe-haven currencies.
What’s coming up?
On the docket today we have a slew of European data which could influence the euro.
Firstly we have Germany’s labour report, which could offer some modest support to the single currency as analysts predict German unemployment will have held at a 39-year low in October.
This will be followed by the release of the Eurozone’s CPI and employment figures.
Of the two the CPI release has the greater potential to impact EUR exchange rates, with another weak inflation reading potentially exerting some pressure on the euro.
In the UK the focus will remain on domestic politics, with GBP exchange rates remaining sensitive to election speculation.
In the absence of any notable US data releases today, any movement in the US dollar is likely to be driven by market risk appetite.