The Pound continued its decline today, as USD trades are broadly higher across the board. The GBPUSD briefly broke below 1.4565 and trades around the level reaching a fresh 5-year low.
A series of bad news rather than one single event is largely responsible for this. First, Chinese stocks plummeted again, now down 7%, leading to another suspension in trading and dragging the FTSE100 lower, down over 3% since the start of the day. Second, the UK house prices surged 1.7% in December, according to Halifax, and fears of a house bubble have resurged among investors further dampening any possibility of a rate hike this year. Uncertainty over UK membership in the EU remains further weakening confidence and finally George Osbourne today warned of a ‘dangerous cocktail’ of economic risks and that 2016 will be one of the toughest since the financial crisis.
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In addition, EU unemployment rate was better than the expected at 10.5% from the forecast of 10.7% and US unemployment claims are slightly worse than the expected 277k.
Tomorrow, the main focus will be Non-Farm Payrolls from the US at 1.30pm GMT with a forecast of 203k. The last 2 readings were better than expected and we saw USD strengthen on both occasions.
We also have Canadian employment figures as well as French, German and UK Trade Balances in the morning.
Latest FX news by Joe De Berniere