The PM, Boris Johnson, met with the Queen at Buckingham Palace early on Wednesday to mark the official start of the election period. Boris Johnson launched the Conservatives Party’s election campaign in Birmingham, saying that his Brexit deal “delivers everything I campaigned for”. However, his plans to grab headlines for the Conservatives campaign launch were thwarted by the resignation of the Welsh Secretary Alain Cairns. It is an unusual event for a cabinet minister to resign during an election campaign. Meanwhile the Lib Dems, Green Party and Plaid Cymru have agreed an election pact to not stand against each other in dozens of seats to ensure there are a greater number of remain MPs in Parliament.
Looking to the markets, Super Thursday is upon us and as such, the Bank of England monetary policy decision accompanied by its minutes and Quarterly Inflation Report (QIR) will hog the limelight at 1200 GMT ahead of the BOE Governor Mark Carney’s speech which is scheduled at 1230 GMT. The UK central bank is unanimously expected to remain on-hold in its pre-election meeting. However, markets expected the central bank to lower its growth and inflation forecasts amid uncertainty over the Brexit outcome.
Following a brief consolidation through the early part of Wednesday's trading action, the GBP/USD pair witnessed some intraday selling and was being weighed down by a modest pickup in the US Dollar demand. Reports on Wednesday indicated that the signing of the “Phase One” US-China trade deal might be delayed until December as discussions continued over terms and venue. Meanwhile, the British Pound was further weighed down by the fact that incoming opinion polls showed a marginal squeeze in the lead for the UK Prime Minister Boris Johnson's Conservative Party at the upcoming UK snap election in December. As polls begin to narrow, the possibility of a hung parliament kept the pair trading at a relatively flat level. The BoE is universally expected to maintain the status quo and hence, the key focus will be on the Quarterly Inflation Report (QIR), wherein the central bank is expected to lower its economic growth and inflation forecasts
The EUR/USD pair holds the lower ground near three-week lows of 1.1055 after the German industrial activity contracted more-than-expected in September. The final Euro-zone Services PMI prints for October came in better-than-expected, while retail sales also surprised to the upside and initially extended some support to the shared currency. However, the uptick was halted after the IMF – in its Regional Economic Outlook report – downgraded Euro-zone growth and inflation forecasts for 2019 and 2020.
At the time of writing;
GBPUSD: Trading below 1.29 at 1.2865
GBPEUR: Trading above 1.16 at 1.1620
EURUSD: Trading below 1.11 at 1.1071
Special Notes: The figures are based on the live mid-market rates, correct as of 08:00 GMT on 07/11/2019, and are provided for indicative purposes only. Live mid-market rates are not available to consumers and are for informational purposes only. The rates we quote for money transfer can be selected via the page on our website ‘Live Money Transfer rates’.
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