Sterling retreated on increased political uncertainty.
There was choppy trading on Friday amid month-end position adjustment and lack of liquidity.
The dollar retreated from 6-week highs as EUR/USD regained the 1.1000 level. The Swiss franc weakened as demand for defensive assets remained limited.
Risk appetite was supported by Chinese PMI data with equity markets recovering from slight losses recorded on Friday, although US-China trade uncertainty limited gains.
Federal Reserve officials will be under a blackout this week ahead of next week’s policy meeting, although there was further speculation that there would be a medium-term shift to allowing a higher inflation rate which may unsettle the dollar.
Treasuries edged lower ahead of the New York open with the dollar holding a firm overall tone. Wall Street equities drifted lower and USD/JPY dipped marginally below 109.50 at the European close, although narrow ranges prevailed.
Sterling retreated on increased political uncertainty amid opinion-poll evidence of a narrowing Conservative Party lead.
UK consumer credit growth was above consensus forecasts for October and overall lending to individuals increased to £5.6bn from a revised £4.7bn previously which suggested firm consumer spending. Sterling was unable to make any headway ahead of the New York open. There was choppy trading surrounding the afternoon London fix with month-end and pre-weekend position adjustment having a significant impact. GBP/USD moved back above 1.2900 to a peak around 1.2940 while GBP/EUR consolidated near 6-month highs around 1.1730.
There was fresh political uncertainty during the weekend as Friday’s London terrorist attack added a further layer of uncertainty. Although most opinion polls still indicated a likely Conservative Party majority they also continued to indicate a narrowing Conservative lead and Sterling dipped lower at the Asian open. The UK currency was protected to some extent by a firmer tone in global risk appetite as GBP/USD held just above 1.2900 with GBP/EUR around 1.1730.
Economic Calendar
| Expected | Previous | ||
|---|---|---|---|
| 07:30 | CHF Retail Sales (Y/Y)(OCT) | - | 0.90% |
| 08:45 | Markit/ADACI Mfg PMI(NOV) | 47.6 | 47.7 |
| 08:50 | Markit Mfg PMI(NOV) | 50.5 | 50.5 |
| 08:55 | EUR German Manufacturing PMI (M/M)(NOV) | - | - |
| 09:00 | Euro-Zone PMI Manufacturing(NOV) | 45.7 | 45.9 |
| 09:30 | GBP PMI Manufacturing(NOV) | 48.1 | 49.6 |
| 14:30 | CAD RBC Manufacturing PMI(NOV) | - | 51.2 |
| 14:45 | USD Manufacturing PMI(NOV) | 52.2 | 51.3 |
| 15:00 | USD Construction Spending (M/M)(OCT) | 0.20% | 0.50% |
| 15:00 | US Manufacturing ISM(M/M)(NOV) | 48.9 | 48.3 |