Sterling edged stronger as opinion polls indicated a Conservative Party General Election victory.
A weak US Chicago PMI index triggered fresh doubts over the US outlook and increased speculation over further Fed rate cuts.
US and German yields both declined with the dollar registering net losses to trade near 12-week lows. There was some caution ahead of key US data releases on Friday.
Sterling edged stronger as opinion polls indicated a Conservative Party General Election victory.
Equity markets lost ground on Thursday as a dip in confidence over US-China trade prospects also undermined sentiment.
A stronger reading for China’s Caixin PMI index helped revive risk appetite and supported equity markets with commodity currencies also making some headway.
The dollar was also unsettled by speculation that the Federal Reserve would look to run the economy hot in order to lessen the potential deflation risks. There was a shift in Fed Funds future with the chances of a further cut at the December meeting increasing to just above 25%. US President Trump continued to attack the Federal Reserve over its interest rate policies.
Sterling drew some support from the latest opinion poll for the December 12th General Election which indicated a strong lead for the Conservative Party. GBP/USD pushed to highs around 1.2975 while GBP/EUR rallied to test the 1.1600 resistance level.
There was no major volatility surrounding the month-end fix, but Sterling faded slightly after the European close following President Trump’s reservations over the potential for a trade deal with the UK under the government’s revised Brexit deal. A slightly less robust tone surrounding global risk appetite also hampered the UK currency.
The government stated that a new Bank of England Governor would not be appointed before the December 12th election.
Sterling overall still posted the sharpest monthly gain since May 2009 as a ‘no-deal’ Brexit was avoided and edged stronger on Friday with GBP/USD trading above 1.2950 despite expectations that the UK manufacturing sector remained in contraction for October.
Economic Calendar
| Expected | Previous | ||
|---|---|---|---|
| 07:30 | CHF Retail Sales (Y/Y)(SEP) | - | -1.40% |
| 07:30 | CHF CPI (M/M)(OCT) | 0.10% | -0.10% |
| 07:30 | CHF CPI (Y/Y)(OCT) | 0.30% | 0.10% |
| 09:30 | GBP PMI Manufacturing(OCT) | - | 48.3 |
| 12:30 | USD Average Hourly Earnings (Y/Y)(OCT) | 3.00% | 2.90% |
| 12:30 | USD Average Hourly Earnings (M/M)(OCT) | 0.30% | 0.40% |
| 12:30 | USD Private Nonfarm Payrolls (OCT) | 108K | 114K |
| 12:30 | USD Non-farm Payrolls(M/M)(OCT) | 105K | 136K |
| 12:30 | United States Unemployment Rate(M/M)(OCT) | 3.60% | 3.50% |
| 13:30 | CAD RBC Manufacturing PMI(OCT) | - | 51 |
| 13:45 | USD Manufacturing PMI(OCT) | - | 51.1 |
| 14:00 | USD Construction Spending (M/M)(SEP) | 0.30% | 0.20% |
| 14:00 | US Manufacturing ISM(M/M)(OCT) | 48.4 | 47.8 |
| 16:00 | FOMC member John C. Williams speech | - | - |
| 17:00 | FOMC Member Richard Harris Clarida Speech | - | - |
| 17:00 | FOMC Governor Keith Randal Quarles Speech | - | - |
| 18:30 | FOMC member John C. Williams speech | - | - |