The pound fell from its six-month high against the euro yesterday as the election boost provided to the Conservative party from the Brexit party began to fade. Despite the moving causing the pound to jump 1% on Tuesday, analysts are unconvinced that this is enough to guarantee the result. The pound was down 0.1% at one point yesterday against the dollar.
If the Conservative party wins a majority, analysts predict a rise of 3% against the dollar. The political analysis puts the significance of the Brexit Party move to step aside in Conservative seats at only 10-15 extra seats, not enough to put aside concerns that they might still fall short of a majority.
Economic data continues to have little influence on Sterling as compared to election news. Though unemployment was lower, falling employment, weak wage growth and fewer vacancies indicate a poorer outlook for the UK’s economy.
GBPUSD opened at 1.2850 and fell in the morning to a low of 1.2824 before recovering across the rest of the day to close almost unchanged
GBPEUR opened at 1.1641 and made modest gains across the day, closing higher at 1.1669
The dollar was steady yesterday as there was no further clarity on trade negotiations between the US and China. The dollar index made gains of about 0.11% against a basket of six currencies. President Donald Trump complained that the US had higher interest rates than most other countries. Markets had hoped he would maybe announce a date for signing a deal with China for phase one of the trade negotiations, but this did not materialise.
The offshore Chinese yuan was down 0.17% against the dollar, having also been on Tuesday due to the political unrest in Hong Kong as well as weak economic data from China.
EURUSD opened at 1.1030 and dropped steadily across the day, closing at 1.1016
