Sterling gains as Conservatives lead polls

GBP

Sterling gained on Monday, climbing back above 1.29 against the US dollar and drifting away from recent lows. Sterling strengthened due to polls showing the Conservatives as favourites to win the general election on 12th December. If the Conservative Party win, Sterling will appreciate as the market sees the Tory party being able to leave the EU with a deal on 31st January. The pound rose 0.6% against the US dollar to reverse 10 day lows on Friday after the Purchasing Managers Index (PMI) showed the weak state of the UK economy. Sterling also gained against the euro and reached a one week high.

Boris Johnson unveiled an election manifesto on Sunday, promising more public sector spending and no further extensions to the departure from the EU. They also pledged no new taxes, in contrast to the Labour Party that has promised to raise taxes on the rich and businesses to fund a major expansion of the state. A number of polls show the Conservatives with a lead of at least 10 points over Labour. That, alongside a decline in fears of a no-deal Brexit, has pushed sterling almost 8% higher since early September.

Key Announcements

15:00 – USD: CB Consumer Confidence – Forecast at 126.9 from previous 125.9.