Daily Currency Update

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Largarde talks monetary policy

GBP - British Pound

Sterling remained fairly muted in mid-week trade however is still trading towards the top end of its recent ranges against the EUR and USD. Markets and investors are still fixated on the December 12 General Election which is currently expected to deliver a Conservative Party majority, according to current YouGov polls.
According to current estimates, the chances of a Conservative majority stands above 60%.
Due to the current odds, it seems like a large portion of the potential GBP move has been priced into the market. Analysts are predicting a 1.3150 surge with a Tory majority.
Since the start of the election campaign, the Tories have received 6m in donations, 8x the amount of all other parties combined. Labour have only received £218,000 so far in the campaign. This highlights the number of high net worth individuals that are relying on a Tory win.

Key Movers

Today will be a big day for the Euro as Christine Legarde is scheduled to make a speech and November PMI’s are released. Since made President of ECB, Lagarde has remained fairly quiet on monetary policy. However much like her predecessor, she feels as though fiscal stimulus is necessary in order to combat global recession and sustain the region’s economy. The key take away will be her thoughts on fiscal stimulus going forward. We should see a response from the Euro dependent on her tone. A dovish tone should send the Euro tumbling towards the EUR/USD 1.10 handle, however a more optimistic view should send EUR/USD on a rally towards 1.11. Germany posted better than expected GDP numbers yesterday and therefore her tone may resemble the boost.
The US-China saga continued on Thursday after US negotiators attempted to once again reach a Phase 1 deal with their Chinese counterparts. However talks are expected to break down once again. The Hong Kong Human Rights and Democracy act has been passed to President Trump and despite China demanding Trump veto the deal, this looks unlikely.

Expected Ranges

GBP/USD: 1.2840-1.2965 ▼

GBP/EUR: 1.1605-1.1755 ▼

GBP/AUD: 1.8945-1.9065 ▲