We use cookies on this site to improve your experience and help us provide you with a better website. An explanation of the cookies we use and their purpose can be found within our Cookie Policy. Your continued use of this site means you consent to the use of cookies.
Hide

September

Brexit news awaited with bated breath

Published: Wednesday 19 September 2018

  • Economic eyes turn to European Central Bank
  • Ripple effects or Chinese Whispers?
  • US Dollar defeated on disappointing data
  • Keep a close eye on Canada…
Sterling has settled after strengthening at the start of the week in the run up to the inflation figures - it should hopefully stay stable unless any major Brexit negativity comes to the fore. Unexpectedly positive inflation data is helping keep the Pound on an even keel, beating expectations and the previous monthly and annual figures. This is a positive sign for the UK economy in times of global economic and political uncertainty. Any further positivity to come from the Bank of England’s speech from Andy Haldane (well, we can dream!) could help push the Pound up a little more. A significant result from the latest set of Brexit discussions, such as reaching an agreement on Northern Ireland, would also have the power to pick up the Pound. More watching and waiting ahead…

Economic eyes turn to European Central Bank

The Euro is waiting for a Brexit boost, too, as international trade worries continue and it deals with its own set of economic concerns in the form of Italy. The European Central Bank (ECB) speaks today, which could move the Euro, as markets wait to see what the way forward will be for European monetary policy. There is pressure to start unwinding the quantitative easing (QE) programme, and changes to this policy could affect the Euro and its key currency pairings.
 
GBP  EUR exchange rate

Ripple effects or Chinese Whispers?

Trade tariffs from both China and US are causing concern for economies worldwide. The future of international trade is on the agenda in a big way, with China and the US at loggerheads and continued Brexit negotiations in the hope of reaching a deal. This is making global markets nervous and currencies in Asia Pacific, in particular, are feeling the strain. Continued international trade worries have weakened the Japanese Yen, although the silver lining here is that this will support exports.

Likewise, the New Zealand Dollar is still in the doldrums, as the New Zealand economy has been dealt several blows recently and is also feeling the pressure of international trade talks.

In contrast, the recently beleaguered Australian Dollar got a boost from murmurs coming from their central bank, the Reserve Bank of Australia (RBA), of raising interest rates, after keeping their base rate at record lows again and again. This, combined with a not-as-bad-as-expected fall in Australian house prices, offered a helping hand to the Australian Dollar.

US Dollar defeated on disappointing data

The US Dollar has been defeated by its major currency partners, as disappointing data continues – this time, a surprisingly steep fall in the Empire State Manufacturing Index. Manufacturing figures in the US have been buoyant in recent months, so this could be a sign of the toll that trade tariff fears are starting to take on the US economy.

Keep a close eye on Canada…

Canadian economic data has also been lacklustre recently, and, along with ongoing North American Free Trade Agreement (NAFTA) worries, could continue to put pressure on the Canadian Dollar. This is one to watch closely.

What to watch in the week ahead

UK Retail Sales will be one to watch – if it follows the positive pattern of other recent UK economic data releases, this could perk up the Pound. The Bank of England bulletin will also hold clues to the state of the UK economy and next steps for monetary policy, alongside the ongoing Brexit debates.

US employment data, continually strong, is due to be released later this week, and could offer a helping hand to the US Dollar, along with US housing and manufacturing data.

Consumer Confidence readings for the EU could certainly move the Euro – the last few months have seen mixed messages and some surprise disappointments from key Eurozone economies, such as Germany. This is one to keep track of. The Eurozone also publishes its overall manufacturing results on Friday, which should give a strong indication of the health of the Eurozone economy.

Canadian Retail Sales and inflation figures are also due at the end of the week – critical catalysts for the Canadian Dollar.

Key Japanese data releases will also be in view, given the Japanese Yen’s status as a safe haven currency and Japan’s recent central bank activity.

#WednesdayWisdom

This week, we want to give a big shout out to two of our dedicated colleagues, Jonathan Russell and Joe De Berniere, who got five gold stars from our happy clients on Feefo.com and are always striving to provide the service that sets Halo Financial apart.

“Terrific service! Jonathan and Joe De Berniere have been such a pleasure to work with.  They are knowledgeable, courteous, and take the time to make sure all of our questions have been answered.  We couldn't be happier with their service.  Thank you!"