US dollar steady despite sharp fall in consumer confidence

Sterling gives up ground on new election polls. Labour making gains against Conservatives.

The greenback held steady in morning New York trade despite news that the US consumer continues to feel skittish about economic prospects, with a gauge of consumer confidence registering an unexpected and sharp decline.

US consumer confidence fell for the fourth month in row in October, defying predictions that the survey would register an increase. A leading indicator, meaning that the survey gives insight into future economic activity, consumer confidence fell to a five-month low and has now registered its longest string of monthly declines in seven years.

Despite this quite gloomy news – consumers account for well over 75% of economic activity – the key EUR/USD pair barely reacted, trading little changed around $1.1012.

Election polls

Elections continue to be the main driver in GBP/USD, which gave up ground early Monday in New York on news that the Labour Party – whose big spending platforms and perceived anti-business bias are generally unpopular with financial market participants – is eking out gains versus the Conservative Party.

The Conservatives, though, still hold a commanding 10+ point lead in polls. News of a possible strong Conservative victory in the December UK general election has usually led to a rally in sterling on perceived Brexit certainty, even though a new Brexit deal would have to hammered out by Prime Minister Boris Johnson if he is re-elected.

GBP/USD gave up most of Monday’s gains, falling about 40 pips early in New York trading around $1.2855.

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