Sterling remained unmoved against the US Dollar, however, as UK political developments continue to dominate the spotlight ahead of the December 12 general election. ith the Conservative Party being generally preferred by financial markets, due to their promise to resolve Brexit uncertainty next month, concerns of a hung parliament are beginning to haunt British markets. Robert Struthers, a director at BMG, commenting on the Tories’ narrowing lead in the BMG opinion poll, said: “If this trend continues, this election could be much closer than it looked just a matter of weeks ago.”
Meanwhile, the US dollar remained under pressure today after China’s manufacturing sector staged a surprise recovery in November.
This has encouraged investors to seek our riskier assets as the global economic slowdown shows signs of abating.
Today also saw the release of the US Markit manufacturing PMI for November, which beat expectations and rose from 52.2 to 52.6.
However, this failed to benefit the US dollar, with November’s US ISM manufacturing PMI falling deeper into contraction territory at 48.1, leaving some “greenback” investors feeling jittery as uncertainty over America’s economic growth increases.
Chris Williamson, the Chief Business Economist at IHS Markit, commented: “[US] Business sentiment… remains worryingly subdued, with expectations about future output growth well down on earlier in the year and running at one of the lowest levels seen since comparable data were first available in 2012.”
Looking ahead, British political developments will continue to drive the pound to US dollar exchange rate this week, with any signs of the Tories’ lead over the Labour Party narrowing being pound-negative.