The pound fell on Friday as investors awaited more political developments ahead of the December 12th general election. The pound had recovered from Thursday’s losses after the Bank of England decision to keep rates constant was not unanimous but was still made a loss for the week, of about 1% against the dollar. However, against the euro, the pound managed to gain 0.1% on Friday.
A combination of weak data and uncertainty over the outcome of the election will prevent major betting on the pound though some analysts have increased their pound positions, believing that a Conservative majority, and therefore Boris Johnson’s withdrawal agreement, are the most likely outcome. This will have a stabilising affect on the pound going forward.
GBPUSD opened at 1.2817 and was stable for most the day, though in the late afternoon fell to a low of 1.2771 shortly after closing.
GBPEUR opened at 1.1599 and rose for most of the day, reaching an afternoon high of 1.1624 before dropping sharply to a low of 1.1589 shortly after closing.
The dollar reached a three-week high on Friday, benefitting from its safe-haven status, as some uncertainty emerged around the roll back of existing tariffs in the US-China trade negotiations. The dollar index rose 0.2% but fell 0.1% against its safe-haven rival, the Japanese yen. Despite markets believing that tariffs were to be rolled back, on Friday President Donal Trump said he had not agreed to this. The overall efforts to reach a trade deal are still being maintained so analysts believe that riskier assets will continue to benefit.
The euro fell 0.3% against the dollar and the Canadian dollar fell after data unexpectedly showed the jobs market stagnating in October with the unemployment rate remaining unchanged.
EURUSD opened at 1.1050 and fell steadily across the day, closing at a low of 1.1019
