06/12/2024
Written by: Ian Morley
Summary:
The US dollar continued to weaken yesterday following disappointing economic data. ADP payrolls were reported at 150,000, falling short of the expected 165,000, and the ISM service PMIs unexpectedly entered contraction territory, dropping to 48.8 against the forecast of 52.6. As a result, both GBPUSD and EURUSD are trading at their highest levels since 13th June. Additionally, the New York Times reported that President Biden is considering whether to remain in the presidential race. Should he decide to withdraw, Kamala Harris is the most likely candidate to replace him.
The minutes from last night’s Federal Reserve meeting did not reveal any new information, with officials indicating a need for more evidence of declining inflation before taking any further action.
In France, the latest Harris Poll suggests that the National Rally and its allies would secure 190-220 seats in the second round of elections, falling short of the 289 needed for an absolute majority, which had minimal impact on the euro.
Speeches:
Market Insight:
Election day in the UK, and the final YouGov poll predicts a landslide victory for Labour with 431 seats, compared to 102 for the Conservatives, 72 for the Liberal Democrats, 3 for Reform UK, and 2 for the Green Party. Markets will get their first indication of the results around 10pm with the release of exit polls. If these confirm a majority, the GBP is likely to be supported, though this has largely been priced in already. The risk for the GBP would be if Labour fails to secure a majority, similar to the situation in 2017 when Theresa May was unsuccessful in doing so.