Sterling was unable to sustain early gains, but held a firm overall tone with markets still expecting a Conservative majority victory.

Overall activity on Monday was stifled by uncertainty ahead of key event risks with overall moves relatively limited.

The dollar was also trapped in narrow ranges ahead of Wednesday’s Fed meeting with up-coming large option expiries also limiting activity.

Sterling was unable to sustain early gains, but held a firm overall tone with markets still expecting a Conservative majority victory.

The Canadian dollar was protected by hopes that a revised US-Mexico-Canada trade deal was imminent.

The dollar was held in tight ranges on Monday which is often the case on the first trading day following the US monthly employment report. Markets were also waiting for key global event risks later in the week.

Sterling continued to advance in early Europe on Monday as weekend opinion polls continued to bolster expectations of a Conservative Party victory. The UK currency pushed to 8-month highs around 1.3180 against the dollar while the Euro tested 30-month lows near 0.8400. There was a limited correction later in the day with a reluctance to extend long positions. There was also notable interest in securing protection against losses in derivatives markets.

Slightly less robust risk appetite also tended to curb potential currency support. GBP/EUR held around 1.1900 with GBP/USD settling around 1.3150.

GDP and industrial production data will be released on Tuesday, although political developments will tend to dominate with the final YouGov large-scale opinion poll due late in the day, although leaks are also likely earlier in the session. Sterling was little changed on Tuesday as GBP/USD held around 1.3150 against the dollar with the potential for choppy trading later in the session. Any suggestion that Prime Minister Johnson will not secure a majority would be likely to trigger sharp Sterling losses.

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