Only one day of campaigning left. The latest polls have shown the Conservative Party’s lead has slipped by three points this week as undecided Leave voters are swaying towards Jeremy Corbyn. This shift could make the exit polls tomorrow night tighter than has been predicted.
Tactical voting has also been a big theme as “Remainers” focus on stopping Brexit altogether. Could this be a larger thorn in Boris Johnson’s side than polls have previously suggested?
The other concern stems from this being a December election and the fact that inclement weather with the forecasted heavy wind and rain on Thursday could drive voters away from polling stations.
There is a lot at stake and markets could well reflect this. Any shocks with the exit polls tomorrow night could cause Sterling to give up its gains made over the past few weeks on positive polling sentiment for Boris Johnson.
The UK election will hog the limelight over the next 48 hours, but there is much to focus on with US and Eurozone interest rate decisions for December.
Wednesday, 11 December 19:00 (GMT) – US FOMC interest rate decision – Previous: 1.75%; Forecast: 1.75%
Thursday, 12 December 12:45 – EU ECB interest rate decision – Previous: 0%; Forecast: 0%
Markets are expecting the Federal Open Market Committee (FOMC) will leave the benchmark interest rate unchanged, having cut it at its last three meetings. However, the following press conference with Federal Reserve Chair Jerome Powell could give us hints at what lies ahead for the US economy.
With US-Chinese trade talks hitting a speed bump and Donald Trump suggesting that a deal would only be agreed when he is ready, the world’s largest economy is not out of the woods yet. Powell could indicate that further intervention may be needed in 2020, if no end is in sight. The threat of impeachment may give further concern to Powell as so much already hinges on how successful the trade talks are.
Lagarde in charge
The European Central Bank (ECB) meeting on Thursday will be the first for Christine Lagarde as its president and could set the tone for what is to come. Lagarde has already announced that she will undertake a strategic review of the ECB monetary policy strategy, the first to take place since 2003. Her first press conference could also be eye-opening for investors in terms of what to expect from the ECB’s future monetary policy, and potentially a change in inflation targets could give the central bank another opportunity to escape from the perils of negative interest rates.
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