Pound sterling strengthens as the US dollar struggles following poor economic statistics.

The Pound Sterling (GBP) has extended its winning streak, which began on June 27. The GBPUSD pair is trading around 1.2740 during the Asian session. Which could be attributed to market optimism ahead of the UK general election on Thursday.

Britain appears to be on track to pick Labour Party leader Keir Starmer as its next prime minister, defeating Rishi Sunak’s Conservatives after 14 often stormy years. A estimate from polling company Survation. As reported by Reuters On Tuesday, predicts. That the Labour Party will win a record number of seats in the national election.

According to Derek Halpenny, head of FX research at MUFG Bank Ltd.. A Labour victory could be good for the pound sterling. A big majority would provide Labour a strong mandate for governing, potentially promoting more political stability.

The lower US Treasury yields add to the pressure on the US dollar.

The US Dollar (USD) underperformed due to the drop in US Treasury yields. The poor US statistics fueled expectations. That the Federal Reserve (Fed) will lower interest rates in 2024. The US markets will be closed on Thursday in commemoration of the Independence Day holiday.

Daily Market movers include the Pound Sterling’s continued advances amid UK elections and Survation.

According to Reuters, the central scenario predicts Keir Starmer’s Labour Party would win 484 of the 650 seats in parliament, much exceeding the 418 seats won by former leader Tony Blair in his memorable 1997 landslide triumph.
The US ISM Services PMI fell dramatically to 48.8 in June, the largest drop since April 2020. This data fell far below market forecasts of 52.5. Following a reading of 53.8 in May.
According to the ADP Employment report, US private enterprises added 150,000 employees to their payrolls in June, the lowest increase in five months. This amount fell short of the projected 160,000 and was lower than the downwardly revised 157,000 in May.
Austan Goolsbee, President of the Federal Reserve Bank of Chicago, told BBC Radio on Wednesday noted that returning inflation to 2% will take time and that further economic data are required. However, Fed Chair Jerome Powell stated on Tuesday that the central bank is returning to a disinflationary path, according to Reuters.
The minutes of the Federal Reserve’s June 11-12 monetary policy meeting, released on Wednesday, indicated that Fed members were in a waiting posture. “Some participants emphasized the Committee’s data-dependent approach, with monetary policy decisions being conditional on the evolution of the economy rather than being on a preset path.”
The pound sterling (GBP) outperforms its peers as Bank of England (BoE) officials are concerned about persistent inflation in the United Kingdom’s (UK) service sector, which has refrained from moving toward policy easing. Meanwhile, inflation in other industries has fallen dramatically due to low demand in both domestic and international markets.