Boris Johnson argued that a “new and revitalised” parliament was required to break the Brexit “impasse”, while Labour leader Jeremy Corbyn conceded to the vote, saying: “I’m ready for it, we’re ready for it. Because we want to be able to say to the people of this country there is an alternative to austerity.” UK markets remain cautious, with the snap election expected to be one of the most unpredictable contests in a generation. In UK ecostats, today saw the release of September’s UK BRC shop price index, which fell for its fifth consecutive month.
Helen Dickinson, Chief Executive at the British Retail Consortium, was hopeful, saying: “The year has seen relatively weak sales and retailers hope that Black Friday and Christmas will reverse this trend with the help of lower prices.”
However, the GBP/USD exchange rate could edge higher this evening if the US Federal Reserve confirms expectations and lowers its interest rate from 2 percent to 1.75 percent.
But with US President Donald Trump’s preliminary “phase one” trade deal with China showing optimistic signs of reaching a resolution by the end of November, the Fed may hold out on any further rate cuts until the US economy shows solid signs of deterioration.
Gus Faucher, Chief Economist at PNC Financial, said: “Given that the economy is not in recession, and it’s unlikely to enter into recession, at some point the Fed is going to stop cutting rates.”
Today’s US preliminary growth figure for the third quarter exceeded expectations and rose by a modest 1.9 percent and could improve the current dovish Fed tone.
UK political developments will continue driving the GBP/USD exchange rate this week, with the spotlight firmly on the election campaigns of the three main parties. While some analysts suspect the Conservatives may already be ahead, others are less certain, describing the election as one of the most unpredictable public polls since the Brexit referendum of 2016.