In what was highly likely to be a difficult week for the Pound, with very limited data out in the UK and the US posting a number of data points, the Pound was effectively at the mercy of the USD. The best thing you could say for the Pound this week in relation to the USD is that it managed to remain trading in a relatively short range and did not lose too much ground.
The week didn’t properly kick off until Tuesday when the US posted its latest CB Consumer Confidence figures, a leading indicator used by the Fed to gauge market conditions. Forecasts were expecting a drop from the previous figure of 101.3 to 100 flat. Final results did show a decline from the previous figure, but not quite as far as forecasts had predicted, with the release coming in at 100.4. On Wednesday, the main talking point was again in the US with the release of New Home Sales figures. Forecasts were expecting to see a figure of 636k compared to the last reading of 698k. In this case, figures came out worse than expected at 619k. Although this showed a slowdown in the housing market, it was not a shocking enough figure to move currency markets.
Thursday was probably the standout day of the week, with the US posting both final GDP figures and unemployment claims at 1:30 pm; however, both came out in line with market expectations, and we saw limited movement in the markets. Later that day, the US Presidential debate between Biden and Trump pushed the Dollar to its strongest point in two months following Biden’s poor performance, where his frailty was once again highlighted, with Trump looking like a much more assured figure.
Next week, the main talking point will be the UK election. With Labour seemingly nailed on to win after the scandal-riddled Conservatives struggle to gain popularity, it is in many ways a question of by how much. As the Labour Party is hardly popular, it looks as if it will be an opportunity for outlier parties to also gain some seats, with the Lib Dems and Reform UK likely to take seats from both the Conservatives and Labour. In terms of the currency markets, I can’t imagine anything other than a large majority proving beneficial for the Pound, and even then, markets probably won’t react kindly to a Keir Starmer-led government.
