The pound fell on Friday as survey data showed that the British business is suffering the worst downturn since mid-2016. UK PMI data showed quicker declines in both the services and manufacturing sectors in November. This will boost the argument for an interest rate cut, which two of the nine policy makers at the Bank of England are already in favour of.
The pound lost 0.5% against the dollar and most investors are not taking any strong bets ahead of the election on December 12th. Analysts have pointed out that a very large Conservative majority could possibly increase the chances of the UK leaving the EU with no deal, even after the withdrawal agreement has come into effect. However a Labour Majority may seen the implementation of policies described as “non-market friendly”.
GBPUSD opened at 1.2914 and dropped sharply across the whole day, reaching a low of 1.2826 shortly after closing
GBPEUR opened at 1.1671 and also fell sharply though only to an early afternoon low of 1.1623 before recovering slightly to close at 1.1633
The US dollar made gains against a basket of currencies on Friday despite dropping earlier in the day. The US factory and services activity gained pace in November, showing the resilience of the US economy. The dollar index that measures the greenback against six major currencies was up 0.24%. Investors have avoided taking any large positions due to mixed messages from the US-China trade talks.
The dollar was aided by survey data from the eurozone showing business growth almost stopped completely in November and services sector activity increased slower than expected. The manufacturing sector contracted again. The euro was down 0.28% against the dollar.
EURUSD opened at 1.1065 and was flat for the morning and early afternoon before dropping sharply to close at 1.1028 and continued to fall in the evening to hit a late night low of 1.1016
