“We expect growth this year to be roughly half that in 2018.” Sterling struggled against the US dollar as division in the bank hinted at a possible rate cut in the first half of 2020. This will weigh on Sterling unless the British economy shows any signs of improvement in the near term.
British politics continued to dominate headlines today, as the major parties outlined their spending plans ahead of the December 12 general election.
With the latest YouGov poll placing the Tories ahead of Labour by 15 points, any indication that the lead has been sustained would benefit the pound.
Markets increasingly perceive a Conservative government as the best way to break the parliamentary Brexit deadlock and infuse the current unstable political outlook with some clarity.
The US dollar rose against the pound today after US initial jobless claims for November beat forecasts and eased from 219 to 211 thousand, consistent with improving labour market conditions and job growth.
After officials at the Federal Reserve signalled a pause in their easing cycle last week, an improvement in the US employment sector boosted the case for a more hawkish Fed in its next policy statement.
We could see the US dollar improve further against the pound at the top of the week if Friday’s preliminary Michigan Consumer Sentiment Index for November meets consensus and improves.
Meanwhile, with no notable UK economic data due until next week, the pound will continue to be driven by political developments ahead of next month’s general election.
If the Conservatives maintain their lead in polls, confidence in the pound is likely to strengthen.