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December 2017

Sterling spikes on Brexit hopes

Published: Friday 01 December 2017

  • Sterling spikes on Brexit hopes
  • Canadian Gross Domestic Product and employment data due later 
By David Johnson
 
Positive news for the Pound….but not for long
 
The Governor of the Bank of England (BoE) made a positive comment about Brexit. Lordy be! Mark Carney said the UK financial sector, which is hugely important to the UK economy, could be freed from red tape after Brexit and is likely to grow much faster as a result. That, plus the rumours that a deal had been struck over the size of the Brexit divorce deal, boosted the Pound yesterday. Sterling hit some of its strongest levels since June. However, the Pound has slipped overnight, as risks were highlighted over the Irish border and a potential rebellion over the amount of money the UK might pledge to the EU just to get out. 
 
Brexit blues
 
There is an unmistakable and rather distasteful pomposity about the EU negotiators telling Theresa May that she has to come back with a revised offer by 4th December and an air of panic-stricken desperation amongst the UK press as they clamour to tell us how weak the UK negotiating position is. I really hope May and Davis aren’t as subservient in Brexit negotiation meetings as the press and opposition leaders would wish them to be.
 
What next for the Pound and the Euro?
 
Technically speaking, the GBPEUR exchange rate has significant EUR buying levels around €1.14 and that capped the market yesterday. The GBPUSD exchange rate had resistance around $1.3450 but that appears to have given way and there is scope for a rally to $1.3650 and maybe even $1.39.
 
Sterling is stronger against most currencies but, as with the EUR, it has given up some of its gains overnight. The day ahead includes a swathe of Eurozone data; most interesting of which is the Manufacturing Purchasing Managers’ Index (PMI), and the German national version of that index as well, both of which came out at close to record highs once again. The UK Manufacturing PMI results were equally impressive, showing a significant improvement on last month’s figure and growth at four-year highs.
 
Key Canadian data expected today
 
This afternoon brings a wave of data from Canada. That includes Gross Domestic Product (GDP) data for September, the forecast for which is quite poor. That has probably been priced into the value of the Canadian Dollar, which has weakened over the last couple of days. Hence, anything better than 1.6% growth on the month will boost the Canadian Dollar. We will also get the unemployment rate for Canada, which might just dip back down to 6.2% after a blip up last month.
 
Feeling festive?
 
And then it is the weekend. Christmas is just 24 days away, so the pressie buying starts to get serious now. People have drawn their secret Santa names and are wracking their brains over what to get Kyle in IT, who has no interest in anything other than computer games and black T-shirts. Oh the joys of the season to be jolly!
 
Pet Shop

“I would like a pair of yellow canaries, please”, said the lady to the pet shop owner.

“I am not sure if I can help you there,” said the owner as he searched the line of cages looking for Canaries.

In a very pompous voice, the lady said,” well, if your shop is so poorly run as to not have anything anybody actually wants, then I shall take my business elsewhere and tell everyone how incompetent and unhelpful you are.

“Do you mind young ones?” calls the owner from behind a rack of cages.

“I didn’t stipulate what age I was looking for, so of course I will take young birds. Surely that goes without saying,” says the lady in her haughty tones.

The shop owner comes back to the counter with a small cage containing two green parrots. He looks at the lady and says, “They’re not quite ripe yet but they’ll do you just fine.”

Behind the Advent Calendar door today is…
 
A Festive Film Quiz!
 
The first entrant to send back all the correct answers wins a festive case of wine!
 
Answers and winner announced in Monday’s update…
 
  1. Who played Father Christmas in the 1994 remake of Miracle on 34th Street?
     
  2. What is the name of the department store where Buddy the Elf works?
     
  3. What was the best-selling toy gone wrong made by Patch in Santa Claus the Movie?
     
  4. What is the name of the head elf in The Santa Clause?
     
  5. How many Home Alone movies are there?
     
  6. Who provides the lead male voice and narration in The Polar Express?
     
  7. What is the name of the character Jude Law plays with his children in The Holiday?
     
  8. What is the name of the people in the village that make the Grinch grumpy?
     
  9. Which now-deceased mega star provided an intro to The Snowman?
  1. Which famous Hollywood dancer and actress turned down the female lead in It’s a Wonderful Life, saying it was “too bland”?

Today's Major Economic Releases

Market BST Data/Event Previous Expected
EUR 09:00 EU: Final Manufacturing Purchasing Managers' Index 60.0 60.0
GBP 09:30 UK: Manufacturing Purchasing Managers' Index 56.3 56.3
CAD 13:30 Canada: Employment Change 35.3k 10.2k
CAD 13:30 Canada: Gross Domestic Product -0.1% 0.1%
CAD 13:30 Canada: Unemployment Rate 6.3% 6.2%
CAD 14:30 Canada: Manufacturing Purchasing Managers' Index 54.3 54.3
USD 14:45 US: Manufacturing Purchasing Managers' Index 53.8 53.8
USD 15:00 US: ISM Manufacturing Purchasing Managers' Index 58.7 58.8

For more information, infographics and the latest currency insights, visit www.halofinancial.com/news