Pound holds multi-month highs as polls point to Conservative victory

Philip McHugh December 6th 2019 - 2 minute read

  • Pound extends gains on stronger Conservative polling figures
  • Surprise Ivey PMI surge drives Canadian dollar higher
  • US dollar fails to benefit from narrowed trade deficit

 
Bets on majority government fuel pound strength
 
GBP exchange rates extended their multi-month highs as the polls continued to point towards a Conservative victory. 
 
With investors betting that next week’s general election will not result in a hung parliament demand for the pound could remain strong.
 
Even so, as markets have all-but priced in the prospect of a Conservative majority, GBP exchange rates look vulnerable to selling pressure on the back of any fresh political developments.
 
Any indication that the apparent Conservative lead is narrowing ahead of the vote could see the pound fall sharply out of favour.
 
 
Canadian dollar could slide if jobs data fails to impress
 
The mood towards the Canadian dollar improved sharply yesterday after a surprise leap in November’s Ivey PMI.
 
The index surged from 48.2 to 60.0, suggesting that economic activity recovered last month, easing fears of a potentially weak fourth quarter performance.
 
However, CAD exchange rates may struggle to maintain their positive footing this afternoon if the latest set of Canadian jobs data fails to impress.
 
With the unemployment rate expected to hold steady on the month the Canadian dollar may not find much fresh cause for confidence, especially if the accompanying wage figures disappoint.
 
 
Stronger payrolls report set to lift US dollar
 
A better-than-expected narrowing of the US trade deficit was not enough to shore up USD exchange rates on Thursday.
 
With the improvement due to a fall in imports, rather than an increase in export volumes, the data raised fresh concerns over the ultimate impact of the White House’s protectionism.
 
The US dollar could find a rallying point today however if November’s non-farm payrolls report shows a solid increase in employment on the month.
 
Evidence that the US labour market is still tightening would give the Federal Reserve greater incentive to remain on hold, limiting the downside potential of USD exchange rates.
 
 
Upcoming Data:
 
Friday, 6th December 2019
13:30 CAD Unemployment Rate
13:30 USD Non-Farm Payrolls Report
 

Written by
Philip McHugh

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