Sterling traded slightly higher last night, as the results of YouGov’s MRP electoral prediction model were released, showing the Conservatives on track for a comfortable majority. The Multilevel regression with poststratification method, which is based on building a model of demographic preference for political parties and applying it on a seat by seat basis, outperformed other polling methods in predicting the 2017 election. Like all polling methods it is vulnerable to changes in turnout, and also relies on a repeat of previous voting tendencies among demographics. The results nonetheless reenforce the message from ordinary polls and projections, which generally suggest the Conservative party has good chances of winning an outright majority. This morning’s data included Nationwide’s House Price Index, which rose 0.5% this month.


The euro is higher this morning, although it has not benefited as much as the Japanese Yen from the risk-off mood hitting markets this morning. Spanish Consumer Price Index inflation has already been released this morning, and showed the index rising 0.4% in November, beating expectations. German inflation will be released throughout the morning on a regional basis.


The Thanksgiving holiday has not prevented the dollar and developments in the US from driving global markets this morning, after Donald Trump signed two bills aimed at supporting protests in Hong Kong. Given the delicate state of US-China talks, the move risks a breakdown in the progress that has been keeping global markets in a state of relative optimism in recent months. China was quick to condemn the legislation, with officials promising a “resolute countermeasures”. The reaction in markets was a general risk-off move, with AUD selling off and JPY gaining. No US data will be released today, but should US-China talks break down over the Hong Kong bill, this will be no barrier to volatility.


The loonie is lower this morning, consistent with the broad risk-off tone seen in markets. Canada’s Current Account will be released today at 13:30 GMT.



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