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UK general election uncertainty really weighs heavily on sterling

STAYING on top of the latest currency news can help you time your transfers more effectively, so find out what you should be looking out for, over the next couple of weeks.

Over the last fortnight, the pound-to-euro exchange rate has been fluctuating between €1.15 and €1.16, because of uncertainty surrounding Brexit, and December’s UK general election.

Meanwhile, the EUR/GBP exchange rate remained steady at around £0.86, while GBP/USD fluctuated between $1.28 and $1.30.

Sterling experienced a lot of volatility last week, after Labour leader Jeremy Corbyn announced that the Labour Party would back a general election, which provided the necessary support for Prime Minister Boris Johnson’s bid for a pre-Christmas poll, to make it through Parliament.

UK markets remained cautious, however, as Brexit developments have been put on pause, for what is expected to be one of the most divisive general elections in a generation.

However, the euro has also been under pressure, with Germany’s flash Markit Manufacturing PMI coming in below forecasts at 41.9, and further fuelling fears that the Eurozone’s powerhouse economy could be facing a recession, in the near term.

The euro was also feeling added pressure, as the Eurozone’s economic woes intensified, last week, with several sub-par data releases adding to concerns that the region is experiencing a prolonged slowdown.

The US dollar weakened, in response to the Federal Reserve’s latest interest-rate announcement. While a rate cut had been long expected, the central bank was more dovish than forecast.

Tuesday will see the release of the UK’s Markit Services PMI for October, which is expected to remain mired in contraction territory at 49.7. However, any surprise improvement could buoy sterling, because growth in the UK’s largest sector would provide some confidence in the economic outlook.

llMeanwhile, US-dollar investors will be looking ahead to Wednesday’s release of the preliminary nonfarm productivity figure for the third quarter, which is expected to come in at 0.9%.

This week will also see the Bank of England (BoE) announce its latest interest-rate decision. No change in interest rates is forecast, but any dovish commentary from Governor Mark Carney could apply downward pressure on the GBP/EUR exchange rate.   British political developments will also remain in focus, with the pound potentially climbing, if the Conservatives remain ahead in the polls.

At Currencies Direct, we’re here to talk currency whenever you need us, so get in touch if you want to know more about the latest news, or how it could impact your currency transfers. Since 1996, we’ve helped more than 250,000 customers with their currency transfers. Just pop into your local Currencies Direct branch, or give us a call to find out more.

T: +34 922 971 781

E: canaries@currenciesdirect.com

W: currenciesdirect.com

Short URL: http://www.canarianweekly.com/?p=50705

Posted by on Nov 8 2019. Filed under Business & Finance. You can follow any responses to this entry through the RSS 2.0. Both comments and pings are currently closed.

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