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Pound muted as Labour manifesto contains no surprises

Philip McHugh June 14th 2024 - 2 minute read

The pound traded in a narrow range on Thursday as the launch of the UK labour party’s election manifesto offered no new fiscal plans.

Sterling remains mostly muted so far this morning, with GBP/EUR flat at €1.1873, and GBP/USD dipping to $1.2732. GBP/CAD is subdued at CA$1.7503, while GBP/AUD and GBP/NZD hold steady at AU$1.9236 and NZ$2.0736, respectively.

Coming up, will an improvement in US consumer sentiment bolster the US dollar this afternoon?

What’s been happening?

The pound traded sideways through yesterday’s session as markets digested the Labour party’s 2024 election manifesto.

As the expected government in waiting, markets were eager to find out more about Labour’s plans for fiscal policy.

In the end Sterling was left muted as Labour’s manifesto didn’t contain any real surprises, with almost all of the party’s plans for tax and spending having been previously announced.

Meanwhile, the US dollar firmed on Thursday, strengthened by a trimming of Federal Reserve interest rate cut bets in the wake of the US central bank’s rate decision on Wednesday.

However, the US dollar’s upside potential remained limited in the face of a surprise contraction in the US producer price index and jump in initial jobless claims.

At the same time, the euro stumbled yesterday after the Eurozone’s latest industrial production figures reported a surprise contraction in factory output at the start of the second quarter.

What’s coming up?

Looking ahead, the US dollar may maintain a positive trajectory today, with the publication of the University of Michigan’s US consumer sentiment index.

After falling to a six-month low in May, consumer sentiment is forecast to have improved this month, which may help to underpin the US dollar as this week’s session comes to a close.

Meanwhile, EUR investors will look to a series of speeches by European Central Bank (ECB) policymakers, including Vice-President Luis de Guindos for fresh impetus. Will a broadly hawkish tone from Guindos and his colleagues help to lift the euro?

Meanwhile, in the absence of any notable UK economic data, the pound may struggle to find any strong directional bias today.

Written by
Philip McHugh

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