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Pound US Dollar Exchange Rate Steadies as Markets Price in Conservative Election Victory

GBP/USD Exchange Rate Rangebound, UK General Election in Focus

The Pound US Dollar (GBP/USD) exchange rate held steady at nine-month highs today, with the pairing currently trading around $1.321 as markets seem to have priced in a Conservative victory for today’s general election.

Professor Sir John Curtice, the Professor of Politics at the University of Strathclyde, commented:

‘[S]upport for the Conservatives is almost back to the level it enjoyed in 2017, thanks not least to its ability to secure the support of over half of all those who voted Leave in 2016.

‘In contrast, Labour are at risk of seeing all the gains the party made in 2017 reversed, raising fresh questions about the party’s long-term future north of the border.’

With today setting the tone for the next five years of Brexit and economic policy, Sterling is expected to stay steady as long as a Tory victory is priced in by markets.

Any signs of a hung parliament, however, would weaken the Pound on heightened uncertainty around Brexit and the economy going forward.

USD/GBP Exchange Rate Steady as Fed Signals Long Policy Pause

The US Dollar (USD) held steady against the Pound (GBP) following yesterday’s interest rate decision from the Federal Reserve, which confirmed expectations and held at 1.75%.

Fed Chairman Jerome Powell, however, signalled a long policy pause throughout 2020.

Jason Pride, Chief Investment Officer at Glenmede Trust Co., commented:

‘It’s ‘steady as she goes’ from the Fed today – the statement provided little ground-breaking news on the path of monetary policy. The prevailing message out of today’s meeting is that the Fed remains on hold, barring any material upside surprises for inflation.’

Today will see the release of the US PPI figures for November, with the ‘Greenback’ likely easing against the Pound if producer prices slow as forecast.

These will also be followed by the US Initial Jobless Claims figure for December, which is expected to increase from 203 thousand to 213 thousand.

GBP/USD Outlook: Could Sterling Sink on a Hung Parliament?

UK political developments will continue to drive the Pound on Friday, with the outcome of today’s general election being a majorly decisive factor for GBP’S direction.

If the Labour Party win or there is a hung parliament, we could see the GBP/USD sink on heightened uncertainty due to market’s having already priced in a Tory majority.

US Dollar investors will be looking ahead to tomorrow’s release of the US Retail Sales Control Group figure for November, which is expected to hold steady at 0.3%. However, any signs of improvement ahead of Christmas would provide some uplift for the USD/GBP exchange rate.