Pound Sterling

Brexit Deal Hopes Bring Another Rebound in Volatile Pound

Pound News: Hopes for Brexit Deal Rise, Boosting Pound

Investors bought into the Pound at the start of today’s session on reports that progress is being made on sticking issues in UK-EU Brexit negotiations after European Commission President Ursula von der Leyen said there was a path to a deal.

This Brexit optimism overshadowed the latest UK inflation rate data, which came in much lower than expected.

However, Sterling’s gains were limited later in the day following comments from Downing Street that a no-deal is still the most likely outcome despite some progress.

Brexit developments will remain the primary focus for GBP investors, while the Bank of England’s (BoE) December policy decision tomorrow could also drive movement.

Euro News: Strong Eurozone PMIs Keeps Euro Appealing

The Euro remains appealing versus major rival currencies like the Pound and US Dollar despite Germany beginning a ‘hard’ lockdown over Christmas.

The latest Eurozone PMI data showed that the bloc’s economy performed much better than expected this month, although the service sector still remains in a state of contraction.

Eurozone inflation rate data due tomorrow is unlikely to be hugely influential, instead the Euro will likely be influenced by its negative correlation with the US Dollar.

US Dollar News: USD near Multi-Year Lows

The US Dollar remains one of the market’s weakest major currencies. Coronavirus vaccine news and optimism on US fiscal stimulus have supported risk-on trade through the week, weighing on demand for the safe-haven US Dollar.

The Pound and Euro are both trending near multi-year highs against the US Dollar today as a result.

US initial jobless claims data due tomorrow, while forecast to lower, is likely to be overshadowed by developments in US fiscal stimulus news, or shifts in safe-haven sentiment.

Canadian Dollar News: CAD Weakens Despite Rise in Inflation

The Canadian Dollar struggled during today’s session despite a surprise uptick in the November inflation rate, which strengthened from 0.7% to 1% on the year in November.

Canada’s November employment data from ADP will be published tomorrow, with CAD likely to continue being influenced by market trade sentiment and US Dollar strength though.

Australian Dollar News: ‘Aussie’ Muted ahead of Jobs Report

The risk-sensitive Australian Dollar was subdued during today’s session as market risk appetite faded slightly.

Tomorrow’s Asian session will see the publication of Australia’s November job market report. As the job market is a key part of Australia’s economic health, this could cause AUD weakness if it disappoints.

Upcoming Data

Thursday, 17th December

00:30    Australian Job Market Report

07:45    French Business Confidence

10:00    Eurozone Inflation Rate

12:00    Bank of England (BoE) Policy Decision

13:30    Canadian ADP Employment Change

13:30    US Building Permits and Housing Starts