UK goes to the polls for General Election
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Daily Currency Update
GBP/USD pushed higher yesterday as some soft US data saw the dollar weaken. The monthly ISM Services PMI reading came in at 48.8 way below last month's 53.8 and the 52.6 forecast. The survey has been trending lower over recent months and this was only the second sub-50 reading that shows whether the sector is expanding or contracting since the start of 2023. Domestically all eyes are focused on today's UK General Election which if the polls are to be believed should result in a Labour landslide. It seems markets are fine with the possibility of some changes in fiscal policy down the road from Labour should the polls come to fruition instead preferring some stability in government compared to the tumultuous chopping and changing of leadership seen under the Conservatives in recent years. It will be interesting to see the pound's reaction should the result be narrower than expected or if the polls are proved to be wrong and Labour doesn’t win a majority. GBP/USD is back above 1.27, currently at 1.2745. GBP/EUR is around 1.18.Key Movers
The rumours about President Biden potentially pulling out of the upcoming US election have generated significant buzz, especially following his recent debate performance. However, it’s essential to treat such reports with caution, as political rumours often arise and may not always reflect the actual intentions or decisions of the individuals involved.Regarding the market response, it's interesting to note that the dollar remains relatively unaffected by this political uncertainty. This suggests that investors are currently more focused on economic indicators, such as the Services PMI and the upcoming monthly US Jobs data, rather than political developments. The EUR/USD trading around 1.08 aligns with this sentiment, indicating stable currency markets despite the political speculation.
Tomorrow’s jobs report will indeed be a key event, as it typically provides critical insights into the health of the US economy and can significantly influence market sentiment and currency movements. Investors will likely be paying close attention to this data to gauge the potential impact on monetary policy and economic outlook.
Expected Ranges
- GBP/USD: 1.2690 - 1.2860 ▲
- GBP/EUR: 1.1760 - 1.1860 ▲
- GBP/AUD: 1.8920 - 1.9110 ▼
- EUR/USD: 1.0740 - 1.0850 ▲