IFX Market Report: Monday 4th November 2019

The pound made slight gains on Friday despite reports that Brexit Party leader Nigel Farage said his party would stand candidates in all seats unless the Prime Minister abandoned the deal he has negotiated. It was previously thought that there might be an electoral pact between these two parties to avoid splitting votes in key seats, but this would appear to not be the case.

By splitting votes between leave supporting seats, this would lessen the chances of a Conservative majority, which might scare investors away from the pound. The pound instead gained 0.1% against the dollar, though it was slightly weaker against the euro for most of the day. Most analysts still believe there is a high chance of a hung parliament, which may well prolong the parliamentary deadlock.

GBPUSD opened at 1.2968 and dropped slightly across the day to close at 1.2936

GBPEUR opened at 1.1617 and hit an early afternoon high of 1.1627 before dropping sharply to close at 1.1582. Later in the evening the pair dropped further to hit a low of 1.1552

The dollar fell on Friday after economic data painted an unclear picture on the state of the US economy and renewed optimism of US-China trade deal reduced demand for safe-haven assets. Job growth slowed less than expected in October while salary and hiring in the past two months was higher than estimated. The dollar index fell 0.12%.

Positive data was met with some opposition as the Institute for Supply Management said the US manufacturing sector contracted for third consecutive month in October. Concerns about a slowing economy is weighing on the dollar with some analysts believing that the Federal Reserve will continue to cut rates if data worsens.

EURUSD opened at 1.1163 and fell open to an early afternoon low of 1.1133 before recovering across the rest of the day to close slightly higher at 1.1168

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