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Dip in UK Consumer Confidence Undermines GBP

Pound News: GBP Lifted by IMF Assessment.

The Pound (GBP) strengthened against most of the majors on Wednesday as the IMF welcomed the progress in Brexit, although the institution did also stress that the UK’s split from the EU would still weigh on the domestic economy and that a transitional deal must be struck.

While not a glowing assessment of the UK economy, it was more positive than some investors had fear it may be.

Also bolstering Sterling was the release of CBI’s distributive trade index, which showed that retail sales growth remained strong this month, albeit a little slower than in November.

However, Sterling was undermined overnight as the GfK consumer confidence index revealed an unexpected dip in sentiment, with the index slippiong from -12 to -13.

Looking ahead to today’s session the Pound may retreat if the UK public deficit widened last month as economists expect.

Euro News: EUR Weaken by Drop in German PPI

The Pound to Euro (GBP/EUR) exchange rate made tentative gains yesterday as investors were encouraged by the UK’s latest retail report.

At the same time, the single currency came under pressure on Wednesday as Germany’s Producer Price Index slumped further than expected in November, with price growth falling from 0.3% to 0.1%, missing expectations of a more modest decline to 0.2%.

However, the Euro may rebound later this afternoon with the release of the Eurozone’s latest consumer confidence data, with analysts forecasting that sentiment will have remained positive.

US Dollar News: US Tax Bill Dominates USD Sentiment

The Pound to US Dollar (GBP/USD) exchange rate trended higher yesterday as investors remained wary over the passing of the Republican tax bill.

However the ‘Greenback’ was able to recoup some ground in the afternoon as US existing home sales surged in November, jumping from 5.5m to 5.81m and beating expectations of a more modest rise to 5.52m

The US Dollar is likely to strengthen again later this afternoon as the final GDP reading for the third quarter is released. The data is expected to confirm that the US economy grew 3.3% in the three months to September.

Canadian Dollar News: CAD Lifted by Wholesale Figures

The Pound held steady against the Canadian Dollar (CAD) on Wednesday, with the pairing making some marginal gains following the UK’s IMF assessment.

However, the ‘Loonie’ was able to hold off Sterling’s advances and strengthen in the afternoon as data showed that Canadian wholesale trade sales rose faster than expected in October.

The Canadian Dollar may be able to build on this strength later today with the release of Canada’s latest CPI data, as economists forecast that the country’s inflation rate will have leapt from 1.4% to 2% in November.

Australian Dollar News: AUD Weakens as Iron Ore Markets Slow

After initially tumbling at the start of the European session, the Pound to Australian Dollar (GBP/AUD) exchange rate rallied late in the morning following the robust retail report from the CBI.

Meanwhile, the ‘Aussie’ offered little resistance against Sterling as subdued trading in Chinese commodity futures caused iron ore prices to moderate after racing higher at the start of the week.

The ‘Aussie’ may dip again later tonight should Australia’s new home sales figures have tumbled again in November.

New Zealand Dollar News: NZD Fluctuates after Growth Data

The New Zealand Dollar (NZD) gained overnight as domestic growth data exceeded forecasts.

Growth dipped from 1% to 0.6% on the quarter, with the annual rate of output easing from 2.8% to 2.7%.

However, the year-on-year growth reading had been expected to print at 2.4%, so the result was New Zealand Dollar supportive.

Looking ahead, a lull in domestic data until the New Year means that the ‘Kiwi’ is likely to struggle to find its own momentum over the coming days, likely leaving its fate in the hands of external influences.

Upcoming Data

 

Thursday, 21 December, 2017

 

09:30              UK Public Sector Borrowing

13:30              CA Inflation

13:30              US GDP

15:00              EU Eurozone Consumer Confidence

 

Jimi Boake

Currency Dealer

01442 892 071

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