UK election 10 days away, GBP volatility forecast
The pound spent last week fluctuating in response to the latest UK political developments, while the mood towards the euro soured sharply in response to weaker-than-expected German inflation figures.
Meanwhile, the US dollar was exposed to selling pressure as US markets closed for the Thanksgiving holiday, and AUD exchange rates struggled as the odds of the Reserve Bank of Australia (RBA) cutting interest rates twice in 2020 increased.
The pound spent last week fluctuating in response to the latest UK political developments, while the mood towards the euro soured sharply in response to weaker-than-expected German inflation figures.
Meanwhile, the US dollar was exposed to selling pressure as US markets closed for the Thanksgiving holiday, and AUD exchange rates struggled as the odds of the Reserve Bank of Australia (RBA) cutting interest rates twice in 2020 increased.
UK polling data in focus, pound fluctuates
Indications that the Conservatives could secure a majority in the upcoming election and an unexpected improvement in the CBI reported retail sales index encouraged the pound to trend higher last week.
While the sales index remained in negative territory investors took heart from the uptick, with stronger levels of retail spending having the potential to balance out weaker economic activity.
However, as the latest GfK consumer confidence remained trapped at a six-year low in November this took some of the wind out of the sails of GBP exchange rates.
With the political uncertainty of the upcoming general election still hanging over the economy the pound struggled to resist a bout of selling pressure before the weekend.
Unless November’s finalised UK services PMI shows a positive revision GBP exchange rates look set to remain on the back foot in the days ahead.
Confirmation that the service sector fell into a state of contraction last month would give investors cause for concern about Q4 growth.
The pound could also struggle to exert itself this week if polls indicate that the upcoming general election could result in a hung parliament.
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* Information courtesy of Currencies Direct, Philip McHugh
Joining the corporate trading desk in 2007, Phil now over sees all of Currencies Direct’s corporate dealing activity. Having gained experience working with hundreds of businesses to optimise international payments processes and execute comprehensive risk management strategies, Phil currently works with a portfolio of corporate clients whilst managing Currencies Direct’s overall market exposure
Phil has FCA approval and has completed the Certificate in International Treasury Management (CertiTM)
The contents of this report are for information purposes only. It is not intended as a recommendation to trade or a solicitation for funds. Currencies Direct cannot be held responsible for any loss or damages arising from any action taken following consideration of this information. This article was written by Currencies Direct.
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