Sterling dropped slightly against the euro yesterday as the possibility of a hung Parliament began to look more likely. The polls were showing that Conservative Party support was fairly static, whilst the Labour Party appeared to be moving upwards. However, the pound is stronger this morning against the euro and dollar as the latest poll by Kantar shows that the Conservative Party are leading by 12 points.
The pound may also have been affected yesterday by poor manufacturing PMI data, which showed that UK factories are cutting jobs at the fastest rate since 2012. The report found that manufacturing employment shrank for the eighth straight month, suggesting that political and economic uncertainty is having a negative impact. This morning, we await the release of Construction PMI.
The Bank of England will hold their Financial Policy Committee meeting today. In the last meeting, the committee voted to keep interest rates on hold by a majority of seven to two. It was significant that two officials voted for a rate cut and it will be interesting to see if there are any more votes in favour this time. The minutes will be released on the 17th of December.
The Nato summit will also take place in London today, and Boris Johnson is expected to reiterate the importance of Nato staying united amid tensions between members.
