In what has been a relatively quiet FX session, Sterling has continued to grind out gains against all major currencies ahead of a general election, now only 48 hours away. Sterling did temporarily weaken following the release of another weak set of monthly UK GDP data but quickly recovered, with GBP/USD getting close to 1.32 before giving back some ground. UK GDP was flat in October and in the three months to October, only a modest recovery from negative growth in August and September. These macro data may start to matter once the election is out of the way and markets refocus on the Bank of England’s next move but for now they are playing second fiddle to political considerations.
The Dollar has been broadly stable ahead of the release of tomorrow’s release of US CPI-inflation data for November and the Federal Reserve’s last policy meeting of the year. FOMC members and Chairperson Powell have been clear that the Fed will likely keep rates on hold this week and for the foreseeable future and markets are only pricing in one 25bp rate cut next year.
