The pound rose against the US dollar as UK election optimism increased after the latest opinion poll, leaving the pairing trading around $1.299. Sterling received a boost on Tuesday despite data showing the UK’s construction sector still remained firmly in contraction territory.
While the construction downturn eased in November, an upswing in election optimism buoyed the pound, causing the GBP/USD pairing to hit $1.30 for the first time since May. In the latest opinion poll, Kantar revealed that the Conservative Party widened the gap between themselves and the Labour Party. Boris Johnson’s Tory Party extended its lead against Jeremy Corbyn’s Labour party to 12 points, increasing the likelihood of a Conservative win in next week’s election.
The pound benefitted from the assumption that if Boris Johnson remains in his post as prime minister he will take the UK out of the European Union and put an end to over three years of Brexit uncertainty.
However, looking ahead to Wednesday, Sterling could retreat following the release of the UK services PMI.
Another month of contraction in the UK’s dominant services sector would be GBP-negative.
Meanwhile, the dollar slumped as US President Donald Trump said that a US-China trade deal may have to wait for the 2020 election.
This dampened hopes that a resolution to the ongoing trade war would be possible before the end of the year.
Speaking in London, the US President told reporters: “I have no deadline, no. In some ways, I think it’s better to wait until after the election with China. But they want to make a deal now, and we’ll see whether or not the deal’s going to be right, it’s got to be right.”
However, looking ahead, the dollar could claw back some of today’s losses against the pound if Wednesday’s factory orders rebound after slumping by -0.6 percent in September.
GBP/USD SHORT (Sell)
ENTER AT: 1.2999