- US Dollar extended its recent slump
- Theresa May promises white paper on UK’s Brexit plan
The Pound is trading at a six-week high versus the dollar after an aggressive run over the past week and a half, and this can open the door to an upward trend continuing. GBP-USD is back past the 1.26 interbank level, this morning seeing fresh 2017 highs of 1.1785 against the Euro. The Pound is the strongest currency of the day up 0.8 % against Dollar and 0.61% against Euro. Sterling also saw its largest gains against the Australian Dollar at 1%, so it is a good time for currency buyers to consider reducing their exposure. Again, weak UK data could mean that Sterling’s strong run may stall with Gross Domestic Product (GDP) figures due to be released later this morning.
A lot of this activity is down to the fact markets prefer certainty. The Supreme Court ruled that the government will need approval from Parliament to trigger Brexit, which is seen as positive for Sterling. This was seen as making a ‘soft Brexit’ option more likely. However, the Supreme Court also decided not to force the government to put Article 50 to a vote in the devolved parliaments in Scotland, Wales or Northern Ireland, triggering a fall in Sterling against both the US Dollar and the Euro. However, now it seems investors have decided to focus on the clarity given by the decision. After all, although it lost the court case, this was what the government was expecting, and for weeks it has been preparing to bring laws to the UK Parliament to start the Brexit process. Yesterday, UK Prime Minister May promised a white paper on Brexit, which will contain her “bold” proposals for negotiations with the EU – hopefully providing even more clarity.
The New Zealand Dollar rallied against its peers after better than expected Consumer Prices Index (CPI) data, Government bond yields improved, confirming that The Reserve Bank of New Zealand (RBNZ) rate hike expectations are building. Markets are pricing in at least one rate hike in the next 12 month.
We are awaiting a raft of data today, beginning with UK preliminary GDP, which is expected to have to have risen 2.1% year-on-year, slightly down from 2.2% in Quarter 3. Later this morning, the Eurogroup meets in Brussels and European Central Bank (ECB) Executive Board member, Yves Mersch, speaks in Luxembourg.
This afternoon brings US trade figures and labour data, which are unlikely to move the market.
Happy Australia Day to our readers Down Under. Hope you’re enjoying the hot weather? Jealous, us?
The Addicted Golf Player
Two guys were playing golf, one of them was about to swing the golf club when he noticed a funeral procession going by on the street.
The man stopped in mid-swing and closed his eyes and said a short prayer. The other man truly inspired, remarked, clearing his throat, “wow that was one of the most beautiful things I have ever seen.”
“Well”, the other man said “I was married to her for 35 years.”
Today's Major Economic Releases
||EU: Eurogroup Meetings
||UK: Confederation of British Industry Realized Sales
||US: Unemployment Claims
||US: Goods Trade Balance
||US: Flash Services Purchasing Managers' Index
||US: New Home Sales
||US: Conference Board Leading Index
Daily Currency Analysis by Mike Mistretta
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