The pound remained below the $1.30 mark on Thursday as the release of the opposition Labour Party’s manifesto caused some investors to take profits. The pound will struggle to break this threshold before the December 12th election but will find support closer to $1.29. The opposition party laid out their plans for a socialist vision of the UK, nationalising infrastructure and higher taxes on companies. Whilst the Conservative Party have promised a “dynamic market economy”.
The more “extreme” the Labour manifesto, the more the pound’s volatility will increase, with polling data in favour of the opposition likely to cause larger drops. After the manifesto release the pound fell 0.1% against the dollar. The markets remain optimistic that the Conservatives will win a majority, there are still some signs of nervousness.
GBPUSD opened at 1.2929 and rose to a high of 1.2965 close to midday before dropping back in the afternoon to close at 1.2914
GBPEUR opened at 1.1679 and followed a similar pattern, reaching a high of 1.1702 and closing at 1.1670
The dollar made slight gains on Thursday against other major currencies, with investors still focused on trade developments between the US and China. A report released yesterday suggested that the US could still delay tariffs set for December 15th even if “phase one” of the trade deal has not been signed. The Chinese Vice Premier Liu He said he was “cautiously optimistic” about achieving a deal.
The dollar index gained 0.07% and has been supported by increased trade tensions boosting safe haven demand. Tensions were most recently increased by the US congress passing two bills in support of protestors in Hong Kong and sending a warning message regarding human rights to Beijing.
EURUSD opened at 1.1076 and rose to a high of 1.1091 in the early afternoon before dropping back to close at 1.1065
