With Brexit uncertainty continuing to drag on the industry, Duncan Brock, Group Director at the Chartered Institute of Procurement and Supply, was downbeat in his assessment, saying: “To say these figures are disappointing is a big understatement. Given that the next political hurdle is December’s General Election, all eyes will be on the new administration and clear direction, because at the moment there is little insight into what could possibly pull the sector out of its ditch.”
British political developments remain in focus for GBP investors today, and while the Tories have retained their lead in the polls, UK markets are becoming increasingly jittery on the prospect of a possible hung parliament on December 12.
As a result, the pound has been left rudderless against the “greenback” as political developments take priority over economic data.
Today also saw the leader of Plaid Cymru, Adam Price, say that the general election could begin a movement towards a “new Welsh spirit of independence,” adding further uncertainty into the mix.
The US dollar improved on the weakened pound today despite softening US factory orders in September, with the figure easing by -0.6 percent amid an ongoing US-China trade war.
However, due to increased optimism that the two superpowers will sign off a “phase one” trade deal by the middle of the month, the US dollar edged higher against the pound.
Analysts at the National Australia Bank were sceptical: “As much as the US-China trade updates continue to point to a Phase 1 deal looking like a certainty, the contentious issues on whether the US will cancel the planned December tariffs and remove some of the current tariffs in line with China’s demands remains an unknown and if the issue is not resolved then a deal could easily collapse.”
Any sign that US-China trade talks might fall through this month would undermine confidence in the US dollar, as tensions between the two superpowers are already perceived to be having a negative impact on the American economy.
British political developments will continue to drive GBP/USD exchange rates this week, with any sign that the Tories are maintaining a lead in the polls likely to buoy UK market confidence as a Tory win would mean more clarity on Brexit.