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Sterling (GBP) Buoyed by UK Election Optimism

Published: 4 Dec at 3 PM Tags: Euro, Dollar, Pound Sterling, America, UK, Eurozone, Australian Dollar, New Zealand Dollar, Canadian Dollar, Australia, New Zealand, USA, Canada, China, Germany,

UK Election Optimism Buoys Pound Sterling (GBP)

The Pound (GBP) received an upswing of support on Wednesday as confidence the Conservatives would secure a win in next week’s election increased.

In YouGov’s latest poll Boris Johnson’s party boasted a nine-point lead against Jeremy Corbyn’s Labour which offset weak UK services data. This morning, Markit showed that while the services PMI was better than previous flash data, the sector suffered the sharpest decline in new work in over three years.

Looking ahead, it is likely the Pound will continue to ignore any further weak economic data if polls continue to show the Conservative Party remains ahead in opinion polls. If further polls indicate Boris Johnson’s party is gaining support, Sterling will rise.

Pound Euro (GBP/EUR) Exchange Rate Jumps to 31 Month High

The Pound Euro (GBP/EUR) exchange rate rose to a 31 month high on Wednesday as UK election optimism buoyed the UK currency.

Meanwhile, the single currency was left under pressure as data showed November’s German services sector PMI edged up slightly to 51.7. This was the weakest growth in six-and-a-half years and the PMI composite was left stuck in contraction territory.

Looking ahead to Thursday, the Euro could slump further if November’s German construction PMI disappoints. If growth in the construction sector slows more than expected, EUR could fall.

Pound US Dollar (GBP/USD) Exchange Rate Rises despite US-China Talks Going ‘Very Well’

The Pound (GBP) rallied against the US Dollar (USD) as tensions between the US and China increased following Tuesday’s comments from the US President.

However, on Wednesday Donald Trump appeared more positive about trade, stating talks between Washington and Beijing were going ‘very well’. Added to this, Bloomberg reported that negotiating teams were closer to agreeing on the number of tariffs that would be rolled back in a ‘phase one’ deal.

Looking ahead, strong US factory orders could cause the ‘Greenback’ to regain its losses against the Pound. If October’s orders rise further than expected, the Dollar will rise.

Pound Canadian Dollar (GBP/CAD) Exchange Rate Rises Ahead of BoC Decision

The Canadian Dollar (CAD) fell against the Pound (GBP) today as investors awaited the Bank of Canada’s (BoC) latest interest rate decision.

While markets expect the bank to leave rates unchanged this month, the BoC could hint at rate cuts for 2020 which will weigh on the ‘Loonie’.

While CAD has remained one of the strongest currencies this year thanks to a hawkish central bank, investors are now focused on whether Governor Stephen Poloz will follow other banks and begin easing next year.

Pound Australian Dollar (GBP/AUD) Exchange Rate Increased as Aussie GDP Disappoints

Sterling (GBP) rallied against the Australian Dollar (AUD) on Wednesday as Brexit optimism and weaker than expected Aussie growth pushed the pairing higher.

During the third quarter, the Australian economy expanded by just 0.4% as shoppers were not encouraged to spend by lower interest rates and $25 billion worth of tax cuts.

Meanwhile, the ‘Aussie’ could edge up following the release of October’s Australian retail sales. If sales increase more than expected, AUD will rise.

Heightened US-China Tensions Sends Pound New Zealand Dollar (GBP/NZD) Exchange Rate Higher

The New Zealand Dollar (NZD) fell against the Pound (GBP) over the course of the day as US-China trade tensions increased following the latest developments.

Risk appetite decreased as US President Donald Trump suggested he may not sign a deal with China and let the mid-December tariffs go ahead as scheduled. Added to this, the US House of Representatives passed a bill targeting human rights abuses against China’s Uighur population which further dampened risk appetite, sending the ‘Kiwi’ lower.

Looking ahead, if tensions between the US and China continue to heat up, it will likely dash hopes that a ‘phase one’ deal will be signed before the end of the year, causing NZD to slump.

As of Wednesday, 4th December 2019, the Pound Sterling currency rates mentioned within this news item were as follows:

GBP EUR exchange rate was 1.1827, GBP USD exchange rate was 1.311, GBP AUD exchange rate was 1.9135, GBP NZD exchange rate was 2.0027, GBP CAD exchange rate was 1.7297, and GBP CNY exchange rate was 9.2421.
Dominic Lee About Author: (474 Posts)With over ten years experience as an economist – including four years spent as a chief economist with a major currency broker – Dominic has acquired a wealth of knowledge which he uses to forecast market movements. Dominic now works as an independent business advisor and writes for several financial publications.

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