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Government Shutdown Pressures US Dollar

Pound News: GBP Jumps amid EUR Weakness, USD Sell-Off

The Pound (GBP) strengthened against the majors yesterday benefitting from the dip in the US Dollar (USD).

The Euro (EUR) also benefitted initially from the USD selloff however afternoon trading saw it sold off, leaving Sterling as the big winner on Monday.

Looking ahead the Pound may strengthen later today with the release of the UK’s latest public sector borrowing report. Figures are expected to show borrowing fell sharply in December.

Euro News: EUR Slides on Coalition Speculation

News that Germany’s SPD party has agreed to formal talks with Angela Merkel over the creation of a coalition government initially weighed on the Pound to Euro (GBP/EUR) exchange at the start of this week.

The single currency later fell back as analysts saw little hope for any deal being struck, with many in the SPD remaining reluctant to work with Merkel again.

The Euro may, however, rally this morning with the publication of Germany’s latest economic sentiment figures. The ZEW’s sentiment index is expected to have shown an improvement in January.

US Dollar News: USD Weakened by Government Shutdown

The Pound to US Dollar (GBP/USD) exchange rate surged by nearly half a cent at the start of this week’s session following the failure of US lawmakers to prevent a government shutdown at the weekend.

While the shutdown is not expected to significantly Impact economic growth, it does highlight the political concerns that have recently dragged on the US Dollar, increasing market caution.

On the data front, things don’t look much better for the US Dollar, with analysts forecasting disappointing figures in the coming week.

Canadian Dollar News: CAD Subdued by NAFTA Concerns

The Pound was able to push slightly higher against the Canadian Dollar (CAD) on Monday as markets speculated over the possible collapse of NAFTA.

Officials will meet later this week for the latest round of talks over the trade agreement, with some observers suggesting that Trump is close to pulling out of the agreement.

Such an outcome would put considerable pressure on CAD given that around 75% of Canada’s exports are destined for the US.

Meanwhile the Canadian Dollar may slide further later this week as economists forecast the latest CPI figures will show domestic inflation to have dipped in December.

Australian Dollar News: ‘Aussie’ Weakened by Gloomy Retail Forecast

The Pound to Australian Dollar (GBP/AUD) exchange rate started the session on a fairly strong footing this week following some gloomy forecasts for Australian retail sales last month.

The Commonwealth Bank predicts that after November’s impressive figures December will see sales growth slow by at least 0.5%, denting hopes that consumer spending would remain robust over the coming months.

The Australian Dollar is likely to find itself a little directionless this week due to a lull in domestic data, with any movement likely to be driven by commodity prices or the strength of the US Dollar.

Upcoming Data

Tuesday, 23 January, 2018


09:30              UK Public Borrowing

10:00              DE Economic Sentiment

11:00              UK CBI Trends Orders

15:00              EU Consumer Confidence


Jimi Boake

Currency Dealer

01442 892 071

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