GBP - British Pound
Last week ended in a dream world for sterling after election news (expectation of a Tory majority) caused the British currency to rally against the majority of its peers. The end of the week bought with it GBP/EUR levels not seen in over 2.5 years and GBP/USD levels not seen in 7 months. Many believe that GBP will still surge on the back of a Tory majority announcement however it may be the case that much of the gains have already been priced into the market. The results are expected to be released early Friday morning.
Expected GBP/USD rates under each of the three most likely circumstances:
Conservative majority – 1.3300-1.3500
Conservative hung parliament – 1.2800-1.3500
Labour majority – 1.2600-1.2800
Both parties will continue to drum up last minute support this week by targeting those they believe are the ‘fence sitters’. Johnson looks to secure voters from Brexit-voting labour constituencies, such as Humberside. Corbyn however is looking to capitalise on his social media following and focus on NHS and aiding the young demographic with their financial situation.
The U.S Dollar held its ground on Friday after much better-than-expected job market data was posted however as is the case at present, USD gains are anchored to the downside by the looming US-China trade war tensions. This data shows the US resilience in the face of slowing global economic growth. The question now is whether Trump will impose further planned tariffs ($156bn) worth of products from China, or whether he will aim to de-escalate the tensions. This week sees the release of US CPI, US Retail sales, FOMC and ECB rate decisions. The most important thing to look out for is the respective economic outlooks rolling in to Q1 and Q2 2020.