GBP: Focus on the UK Labour Party conference – ING
Pound Sterling (GBP) has been underperforming since around the middle of September, with plenty of focus on whether the UK is 'going bust' or will require an IMF bail-out – neither of which is likely, ING's FX analyst Chris Turner notes.
Support has held at 1.3300 for Cable
"At the heart of that story is weak UK growth and parlous public finances, which leave the UK Labour government with very little room for manoeuvre. Not helping that story last week was an interview given by Prime Minister Keir Starmer's main rival, Andy Burnham, that the government should ignore the bond market."
"With that in mind, there will be a lot of focus on the Labour Party conference, which kicks off in Liverpool today. Any signs that the government will cede ground to the left wing of the party by, say, withdrawing the two-child cap on benefits, would be taken poorly by Gilts and sterling."
"If GBP can survive that party conference unscathed, then presumably more rhetoric from Bank of England hawks later in the week – including Governor Andrew Bailey – could provide sterling with a little more support. So far, support has held at 1.3300 for cable. And US jobs data will help determine whether we end the week over 1.35."
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FXStreet Insights Team
FXStreet
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