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November 2017

Sterling remains vulnerable amid political uncertainty

Published: Thursday 09 November 2017

  • Sterling remains vulnerable amid political uncertainty 
  • Reserve Bank of New Zealand holds rates steady
  • US employment claims this afternoon
By Joe De Berniere

The Pound stumbled yesterday, losing ground across the board. GBPUSD dropped 0.6% down to 1.3096 - inching closer to the one-month low of 1.3040 it hit on Friday and down to 1.12 vs EUR amid the political uncertainty around May’s government. The prime minister replaced her defence secretary, Michael Fallon, last week over his past behaviour and yesterday saw the resignation of Brexit supporting Secretary of State for International Development Minister, Priti Patel. It comes amid controversy over her unauthorised meetings with Israeli officials, of which includes Israeli Prime Minister Netanyahu. She had apologised to Theresa May on Monday about these meetings but it emerged she had two further meetings without government officials in September. These two resignations within exactly a week of each other does not instill confidence in May’s government and as a result the Pound is clearly starting to suffer. 
Overnight, the Reserve Bank of New Zealand (RBNZ) kept rates at their historic low of 1.75% but signalled that interest rates may need to rise slightly earlier than previously expected as the bank revised up its inflation forecasts. It brought forward projections for a rate hike to the second quarter of 2019 from the third. GBPNZD dropped over 1% down to 1.8825 as a result. 
The main focus of today will be US Unemployment Claims in the afternoon and most likely markets will react further to the news of Priti Patel’s resignation.  
Doggy troubles
A poodle and a collie were walking down the street.
The poodle turned to the collie and complained, "My life is a mess. My owner is mean, my girlfriend is having an affair with a German shepherd, and I'm always on edge."
"Why don't you go see a psychiatrist?" asked the collie.
"I tried that," replied the poodle. "but then  I realised I'm not allowed on the couch."

Today's Major Economic Releases

Market BST Data/Event Previous Expected
EUR 09:00 European Central Bank Economic Bulletin    
EUR 10:00 EU: Economic Forecasts    
CAD 13:30 Canada: New Housing Price Index 0.1% 0.2%
USD 13:30 US: Unemployment Claims 229k 232k
USD 15:00 US: Final Wholesales Inventories 0.3% 0.3%

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