Sterling has continued to rise, building on the last week’s momentum.
The Brexit negotiations have progressed, with neither side of the table pouring cold water over the news last week that a tentative deal on the continued access to financial services and the Irish “backstop” issue are on track to be finalised later this month.
Our focus today is on the UK services industry. Seen as the engine room of the British economy, accounting for 76 per cent of GDP, the Purchasing Managers’ Index (PMI) release today will provide insight into the confidence within the sector. Having been forecast to have dropped from 53.9 in October to 53.3 this month, any miss in the estimates could have a negative impact on the Pound.
Meanwhile, the greenback has begun the week in bullish territory following Friday’s employment data. Non-farm payroll data rebounded sharply in October, with 250,000 new jobs been added compared to 118,000 in the previous month. This was supported by a large improvement in wages, which rose 3.1 per cent year on year. Such positive data provide support for the Federal Reserve’s likely rate rise in December.
Tomorrow the US will go to vote. Opinion polls show a strong chance that Donald Trump’s Republican Party could lose control of the House of Representatives. This would be a blow to the US president, who has had two years of control of both chambers, allowing him to push through his substantial tax cuts and spending initiatives.
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