LAST WEEK: KEY TAKEAWAYS

UK: Election polling sways the pound

• The pound weakened against the US dollar early in the week after a poll by research firm Kantar showed the Conservatives’ lead in the general election shrinking;

• However, it recovered when further polls, including one from YouGov which successfully forecast the outcome of the 2017 election, indicated the Conservatives would win a majority.

• Omnis view: A Conservative majority would ease Brexit uncertainty in the short term as Boris Johnson should then have enough support for his withdrawal deal. However, with less than two weeks left to campaign, and the electorate’s views on Brexit testing traditional party affiliations, neither the Tories nor Labour will take anything for granted. Unless the markets experience a shock, the pound is likely to continue marking time until the election outcome becomes clear.

Trade: Optimism builds about phase one deal

• Global shares rose at the start of the week as US President Donald Trump claimed the US and China were in the ‘final throes’ of agreeing the first phase of a trade deal, while Chinese media reported the two sides were making progress towards resolving some of the most contentious issues.

• Omnis view: The positive rhetoric augured well for a deal, but President Trump risked undoing the recent progress by signing the Hong Kong Human Rights and Democracy Act (see below). Meanwhile, the clock is ticking towards the deadline of the 15th December for the next round of trade tariffs- taxes on products imported from abroad- on Chinese goods. In short, the atmosphere around global trade remains tense.

Asia: Human rights act tests US- China relations

• Global shares handed back some of the gains from earlier in the week after President Trump signed the Hong Kong Human Rights and Democracy Act which allows the US to impose sanctions on individuals accused of human rights abuses in Hong Kong.

• Omnis view: China threatened to retaliate if President Trump signed the human rights act which it sees as interfering in internal affairs, so it remains to be seen how this development could impact trade talks between the two sides.

US: Economic growth revised up in third quarter

• There was good news for the US economy as the Bureau of Economic Analysis upgraded growth in the third quarter to 2.1%, faster than the 1.9% it originally announced and a slight improvement on the previous quarter1 

• Omnis view: The upward revision of economic growth should reassure the markets about the health of the US economy.

Economic data

• Thursday- US imports, exports and balance of trade in October;

• Friday- US non-farm payrolls (jobs created) in November;

• Sunday- Chinese imports, exports and balance of trade in November.

UK general election

• The Prime Minister and Jeremy Corbyn, leader of the Labour party, meet in a televised debate on BBC1 on Friday.