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Pound drops sharply in Asia on latest election opinion poll

5/31/2017, 10:31:58 AMBasics of Trading
 Pound drops sharply in Asia on latest election opinion poll

The British pound dropped sharply in early Asia on Wednesday as an opinion poll on the June 8 election showed the conservatives losing ground.

GBP/USD fell 0.34% to 1.2814 after a a report that British Prime Minister Theresa May's Conservative Party risks falling short of winning an overall majority of seats in parliament in a national election on June 8, The Times newspaper said on Tuesday, quoting research by polling firm YouGov.

The Aussie gave up early ground with the market awaiting manufacturing data from China.

AUD/USD was last quoted down 0.08% to 0.7460 ahead of the China PMI manufacturing figures. Australia's economy is closely dependent on commodity exports to China.

The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was last quoted down 0.11% to 97.22.

USD/JPY changed hands at 110.86, up 0.03%.

Ahead, Japan reports provisional industrial production for April with a gain of 4.3% seen month-on-month. China reports the official manufacturing PMI for May with a level of 51.0 seen, a dip from 51.2 in April. The non-manufacturing PMI is also due with a level last at 54.0 in April. A figure above 50 denotes expansion. The private manufacturing PMI from Caixin is due on Thursday.

Australia reports private sector credit for April with a gain of 0.4% seen.

Overnight, the dollar fell against a basket of major basket currencies, as investors mulled over the prospective of a rebound in U.S. economic growth in the second-quarter amid a dip in consumer confidence.

Investors mulled over a mixed bag of economic data released on Tuesday, as consumer confidence dipped in April while consumer spending recorded its biggest increase in four months.

The Commerce Department said that consumer spending, which accounts for roughly 70% of U.S. economic activity, rose 0.4%, in line with economists’ forecasts.

The Consumer Confidence Index fell to 117.9, which was below expectations of a rise to 119.8.

Losses in the greenback were capped, however, as investor expectations that the Federal Reserve will hike interest rates in June remained elevated.

According to’s Fed rate monitor tool over 80% of traders expect the Fed to hike its benchmark rate in June from 0.75-1% to 1-1.25%.

The dollar has failed to recover from its slump in recent weeks, wiping out all of its gains since Donald Trump was elected U.S. president, as investors feared that recent political scandals engulfing President Trump would delay the president's introduction of pro-growth economic agenda, which includes tax reform, deregulation and infrastructure spending.

European Central Bank chief Mario Draghi reiterated that accommodative monetary policy remains necessary despite an uptick in inflation and economic growth.

“For domestic price pressures to strengthen, we still need very accommodative financing conditions, which are themselves dependent on a fairly substantial amount of monetary accommodation.” Draghi said.