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Labour narrowing Conservatives lead

Labour narrowing Conservatives lead


The latest UK opinion poll for the December 12th election also suggested that the Conservative Party lead over the opposition Labour Party had narrowed. This was a significant trigger pushing Sterling lower with failure to hold above 1.2900 against the dollar also a factor. 

EU Chief Negotiator Barnier stated that it would be very difficult for the UK to secure a free-trade deal by the end of 2020 and also warned that the UK may need to accept freedom of movement. The rhetoric reminded markets of the potential difficulties faced by the UK government next year even if the Brexit deal is passed in parliament, although sources also indicated that the EU would prioritise trade talks. 

There was little net change in global risk conditions yesterday as Sterling retreated to lows around 1.2835 against the dollar before a recovery while the Euro hit resistance near 1.1650.



The US October goods trade deficit narrowed to $66.5bn from $70.5bn the previous month with a sharp monthly decline in imports and a smaller reduction in exports. There is likely to have been an impact from China front-loading shipments in previous months ahead of tariff increases. A narrower deficit will provide net support to fourth-quarter GDP. 

Consumer confidence declined to 125.5 for November from a revised 126.1 previously with an increase in the expectations component offset by a dip in the current conditions. There was a slight dip in confidence in the labour market and it was the fourth successive monthly decline, although overall sentiment remained strong in historic terms. 

The Richmond Federal Reserve (Fed) manufacturing index declined to -1 from 8 previously as orders came under fresh pressure, although companies were more optimistic over the outlook and confidence in the US outlook held steady. Dallas Fed resident Kaplan stated that monetary policy is in the right place. There were no overt comments on monetary policy from Governor Brainard and there was no significant shift in futures markets with a December rate cut ruled out. 




Euro maintains a tight range around the 1.1000/20 region as we begin Wednesdays session amidst a so far, uneventful week. The common currency has witnessed both gains with losses in the first half of the week in relation to a cautious stance in the Dollar on the US-China trade front. 

In addition, the Euro remained unfazed after the German Consumer Climate tracked by GfK came in slightly better for the month of December. This result adds to Monday’s improvement in the German IFO and the latest advanced PMIs, collaborating with the idea that the slowdown in the domestic economy in the broader Euroland, could have bottomed out.


Data to watch

13.30 USD – Core Durable Good Orders

13.30 USD – Durable Goods Orders

13.30 USD – Prelim GDP

14.45 USD – Chicago PMI

15.00 USD – Core PCE Price Index

15.00 USD – Personal Spending

15.30 USD – Crude Oil Inventories

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