by SignalFactory · December 4, 2019 | 07:34:17 UTC
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.
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