Timothy Fiora, the chairman of the Institute for Supply Management (ISM), commented: “Global trade remains the most significant cross-industry issue. Food, beverage and tobacco products remain the strongest industry sector and transportation equipment the weakest sector. Overall, sentiment this month remains cautious regarding near-term growth.” The US dollar managed to hold its ground against Sterling following a stronger-than-expected US non-farm payrolls figure for October, which increased by 128 thousand and restored confidence in the struggling economy. October’s US employment figure also improved, with the US labour force participation rate rising from 63.2 percent to 63.3 percent.
Ongoing uncertainty surrounding US-China trade relations continues to hold back the US dollar, with complications in trade talks arising over US agricultural sales to China.
These form a large part of the “phase 1” deal which is expected to be signed off this month.
Treasury Secretary Steven Mnuchin said that it’s “going to take some time to scale up” to President Donald Trump’s goal of a $40 to $50billion annual level.
Meanwhile, the pound struggled to gain on the US dollar following this morning’s UK Markit Manufacturing PMI for October, which contracted by 49.6.
Rob Dobson, a director at IHS Markit, was downbeat, saying: “With a further Brexit extension confirmed and the prospect of a December general election, it looks as if the spectre of uncertainty will cast its shadow over manufacturing for the remainder of 2019.”
UK political developments have dominated markets today, after the leader of the Brexit Party, Nigel Farage threatened to contest every seat in the country unless Prime Minister Boris Johnson drops the current EU-endorsed deal and agrees to form a “leave alliance”.
We could see the GBP/USD exchange rate weaken on Monday if the UK Markit Construction PMI confirms consensus and contracts in October.