Brexit hardliner, Mr Farage has given the Prime Minister until November 14 to agree to his demand, sparking further Brexit uncertainty and undermining Sterling gains made earlier today when a YouGov report put the Tories 15 points ahead of Labour in the polls. Investors note that a full field of Brexit Party candidates would effectively boost the Labour Party by taking much-needed votes from the Conservatives.
The Brexit Party leader dismissed earlier reports that he had agreed to pull candidates in order to avoid split votes with the Tories as “idle speculation”.
Analysts now speculate that a hung parliament is more likely, suggesting the Brexit Party campaign could prove critical.
Commenting on this in a note, Commerzbank’s Thu Lan Nguyen wrote: “Downside risks for Sterling result mainly from a strong election result for Nigel Farage’s Brexit Party, which from the point of view of most market participants would increase the risk of a no-deal Brexit.”
Meanwhile, the single currency was left under pressure today after data revealed that Eurozone annual inflation edged up just 0.7 percent in October; the lowest rate since November 2016.
This left the euro under pressure as the European Central Bank (ECB) aims to keep inflation close to, but below 2 percent.
Looking ahead to the start of next week, the single currency could slump against the pound following the release of Germany’s manufacturing PMI if data reveals manufacturing in Europe’s largest economy has fallen deeper into contraction.
Meanwhile, the pairing could be left flat if UK construction slides further into contraction territory thanks to increased Brexit uncertainty.