Election Heats Up as Labour Narrows the Gap on Tory Lead

Boris Johnson and Jeremy Corbyn have both come under fire this week as the December Elections have taken over in dictating the markets, though is a proxy for Brexit. This was expected as we moved away from the consensus that it was a one horse race and politics become more fierce. It could be argued that Labour are the net winners thus far, given they have been able to narrow the gap to 6 points in the polls. Boris was heavily criticised for his late reaction and slow response of the government to floods in the North of England which have left family’s homeless with businesses destroyed. A mistake which may come back to bite him as he attempts to push Brexit though as swiftly as possible.

Corbyn’s labour has proposed free-for- all broadband under the promise of “free full-fibre” for every home. This would be done through the part nationalisation of BT which would cost around £20bn and funded through an increase in tax on tech companies. It appears that this is news to BT, having been recently assured they would not be considered for nationalisation. This is actually a part of broader discussions of previously proposed ideas to renationalise utilities, railways and Royal Mail. Not only are Labour doing so for the jobs created in local communities but also to use the Nationalisation of the energy network to address climate change. However, there are growing worries from voters that the renationalisation of such key industries may make the UK less attractive for foreign investment – which could further weigh on the Pound.

This week has come to a close with a string of bad data - both Inflation and GDP figures came in lower than expected at 1.5% YoY and 1.1% YoY respectively. To add to this UK Retail sales came in significantly lower than the consensus of 3.7% at 3.1%. It’s safe to say this announcement did not affect the markets, even in terms of short term volatility but if this streak of poor economic could see some form of policy intervention soon.

US

All eyes will remain on the impeachment hearing with a relatively data light day. The focus has changed with House Democrats changing the allegation to bribery as Trump proceeded to call it all a “Hoax.” Expect news out of the UK December Election to be the main market mover for GBPUSD today.

At the time of writing:

GBPUSD – Trading above 1.28 at 1.2870

GBPEUR – Trading above 1.16 at 1.1680

EURUSD – Trading below 1.11 at 1.1017

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