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Pound Down, Euro Surges Thanks to Hawkish ECB Minutes

Pound News: Brexit Worries Limit Sterling Demand

Comments from London Mayor Sadiq Khan put Pound (GBP) exchange rates under some pressure on Thursday, as he offered a fresh warning over the negative impact of a so-called ‘no deal’ Brexit.

The Bank of England’s (BoE) Credit Conditions and Bank Liabilities surveys did not give Sterling any particular cause for confidence either, with signs pointing towards an easing in consumer borrowing.

Speculation over Brexit is expected to continue dominating the mood towards the Pound today, with markets also still showing some concern over the relative fragility of Theresa May’s position.

 

Euro News: Surprisingly Hawkish ECB Minutes Boost EUR Rates

Demand for the Euro (EUR) surged in the wake of the European Central Bank’s (ECB) December meeting minutes, which proved surprisingly hawkish.

As policymakers are starting to debate the need to wind down the quantitative easing program, this encouraged bets that monetary tightening could come sooner rather than later, to the detriment of the Pound to Euro (GBP/EUR) exchange rate.

The mood towards the Euro is likely to remain buoyant today, even in the absence of any fresh Eurozone data.

 

US Dollar News: US Labour Market Shows Signs of Loosening

Mixed US jobless claims figures saw US Dollar (USD) exchange rates come under fresh pressure, with the domestic labour market showing some signs of loosening.

Reports that the Trump administration is preparing to pull out of the North American Free Trade Agreement also encouraged selling of the US Dollar, as markets dislike the prospect of greater US protectionism.

As forecasts point towards a slight easing in the December consumer price index, the Pound to US Dollar (GBP/USD) exchange rate could extend its gains this afternoon.

 

Canadian Dollar News: NAFTA Collapse Fears Weigh on Canadian Outlook

Worries over the possible collapse of NAFTA helped support the Pound to Canadian Dollar (GBP/CAD) exchange rate yesterday, in spite of the persistent bullishness of the oil market.

November’s new housing price index data failed to offer any particular support to the Canadian Dollar (CAD), meanwhile, as the domestic housing market showed fresh signs of slowing.

Even so, if Brent crude is to hold above the US$70 per barrel mark ahead of the weekend this could give CAD exchange rates a rallying point.

 

Australian Dollar News: AUD Benefits as Retail Sales Jump

A 1.2% surge in Australian retail sales on the month in November prompted the Australian Dollar (AUD) to trend higher against many of its rivals.

With consumer spending on the rise, this bodes well for the outlook of the wider Australian economy, especially as the odds of any imminent Federal Reserve interest rate hike were seen to decline.

So long as market risk appetite remains heightened today the Australian Dollar looks set to end the week on a stronger footing.

 

Upcoming Data

Friday, 12 January 2018

13:30     US Consumer Price Index

13:30     US Advance Retail Sales

 

James Spurway

Currency Dealer

01442 892 070

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