2019-11-18 03:15:01 | FX Update: Sterling has rallied on weekend pollsFX Update: Sterling has rallied on weekend polls showing PM Johnson's Conservative Party having extended its lead in opinion polls. This strengthens the odds for the party to win the December-12 election and be returned to Parliament with a working majority, which in turn suggests that the Brexit deal on the table will be implemented in January, when the UK will then enter a transition phase through to the end of 2020. The pound rose by nearly 0.5% in making a 17-day high versus the dollar at 1.2955. The UK currency also posted a new five-month high against the euro. Politicos poll tracker now indicates the Conservatives with 41% support, up 2 points from Friday, with second-spot Labour some way behind with 29%. The euro lifted on the coattails of the pound. EUR-USD printed an 11-day peak at 1.1067, while EUR-JPY and EUR-CHF both posted six-day highs. Both the dollar and the yen, meanwhile, ebbed against most other currencies amid a risk-on backdrop. The three main U.S. equity indices all scaled new record highs on Friday, and S&P 500 futures are showing a 0.2% gain in overnight trading. Most Asian markets have lifted. The PBoC surprised by trimming seven-day reverse repurchase agreements by 5 bp to 2.50%, while state median in China said over the weekend that it had "constructive talks" with the U.S. on trade in a high-level phone call. This was a fresh indication that there is more momentum and serious intent than in previous rounds of talks. Highlights from the week ahead include the release of the Fed FOMC minutes (Wednesday), the first speech by new ECB president, Lagarde, on Friday, prelim November PMI data out of the Eurozone (Friday), and various trade reports out of Asia. Analysts retain a bullish view on the dollar, expecting both the Fed's minutes and U.S. data to overall maintain the view of the Fed being on hold now with the economy in a "good place." |
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