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Sterling Resilient As Markets Prepare For US Elections

Sterling Resilient As Markets Prepare For US Elections

GBP

With overall confidence in the economic outlook remaining weak, further coronavirus restrictions undermined activity in the hospitality sector and potentially having a wider impact on confidence and activity. Sterling was however, resilient with markets still expecting that some form of trade deal would be secured with the EU during November. With the Euro weakening, The Pound was able to push higher to 1.1050 and beyond while securing limited gains against the Dollar.

After the European close, EU Council President Michel stated that Brexit talks are at a most difficult point and markets inevitably remained extremely cautious over the outlook. Sterling, however, is holding steady this morning and is trading just above 1.30 against the Dollar and 1.1070 against the Euro. 

 

USD

US durable goods orders increased 1.9% for September after a 0.5% gain previously and above consensus forecasts of 0.4%. Underlying orders increased 0.8% on the month after a 1.0% gain for August with a solid increase in capital spending. Consumer confidence also  declined slightly to 100.9 for October from 101.3 previously and below consensus of 102.0. There was a significant advance for the current conditions component and respondents were more confident in the labour market trends, but the expectations index declined.

Data releases continued to have little impact with markets continuing to focus on the US Presidential and Congressional elections next week.

 

EUR

Eurozone M3 money supply growth increased to 10.4% from 9.5% previously and the strongest reading since June 2008. The data reinforced evidence that money supply is ample to fuel the recovery, although private-sector loan growth came in subdued at 3.1% from 3.0% previously.

There were still expectations that overall growth and inflation concerns would lead to a dovish ECB stance at Thursday’s policy meeting.

Further concerns surrounding Euro-zone coronavirus developments were noted with reports that French President Macron was no longer ruling out a national lockdown. This alongside expectations that over growth and inflation concerns would lead to a dovish ECB stance at Thursday meeting helped push the single currency lower. The Euro lost further ground after the European close as rumours circulated around a month long lockdown being considered by France. With expectations that Germany would tighten restrictions also, the Euro retreated to below 1.1800 and maintains a defensive tone this morning coming in just above the 1.1750 against the Dollar.

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