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Pound (GBP) Tumbles Following Breakdown in Brexit Talks

Pound News: May Fights to Save Deal after DUP Backlash

The Pound (GBP) continued to drift lower against the majority of its peers on Tuesday on fears that the DUP had effectively torpedoed a Brexit deal by rejecting proposals for the Irish border.

Also weighing on Sterling yesterday was a larger than expected downturn in the UK’s Services PMI last month as it tumbled from 55.6 to 53.8, well below the more modest fall to 55.0 that had been forecast.

A lull in domestic data means that the Pound is likely to remain sensitive to Brexit news over the next couple of days, with any report of further frustration likely to weaken the currency further.

Euro News: GBP/EUR Exchange Rate Recoups Losses on Poor Eurozone Retail Figures

After initially tumbling on Tuesday in reaction to Brexit concerns, the Pound to Euro (GBP/EUR) exchange rate rallied by mid-morning on the back of some disappointing Eurozone data.

Figures released yesterday showed that Eurozone retail sales growth fell sharply in October, slumping from 0.8% to -1.1%, almost reaching a new four-year low.

The single currency may be able to recoup some of its losses later this morning however, with an expected uptick in German construction activity possibly strengthening the appeal of the Euro.

US Dollar News: USD Relinquishes Gains as Service PMI Disappoints

The Pound to US Dollar (GBP/USD) exchange rate initially retreated yesterday as Theresa May struggled to salvage an exit agreement with the EU after the DUP’s rejection of a deal which would see Northern Ireland retain access to the EU customs union.

However, the ‘Greenback’ failed to hold on to its gains in the afternoon as the currency was pressured by a larger than expected decline in November’s US Services PMI.

The US Dollar may also tumble later today with the publication of the latest US employment report, which is expected to show that the number of Americans entering work last month slipped.

Canadian Dollar News: GBP/CAD Tumbles after Trade Data

The Pound (GBP) to Canadian Dollar (CAD) exchange rate fell by over half a cent on Tuesday as markets feared that Brexit trade discussions will be delayed by the DUP’s refusal to play along in Brexit.

Meanwhile, aiding the ‘Loonie’s’ advance was Canada’s latest trade balance figures, which revealed that the nation’s trade deficit narrowed more than expected in October.

The Canadian Dollar could see further gains later this afternoon following the Bank of Canada’s (BoC) December policy meeting as while the rate will likely remain unchanged, any possible hints of further hikes in 2018 may strengthen the currency.

Australian Dollar News: AUD Strengthened by Optimistic RBA

The Pound to Australian Dollar (GBP/AUD) exchange rate plummeted by over a cent on Tuesday as the Reserve Bank of Australia (RBA) appeared optimistic on domestic wage growth.

Further aiding the ‘Aussie’s rise yesterday was a rebound in Australia’s retail sales figures as Tuesday’s data revealed that sales rose 0.5% in October.

The Australian Dollar may retreat overnight on Wednesday however as domestic trade figures are forecast to show that Australia’s trade surplus slipped in October.

New Zealand Dollar News: NZD Lifted by Rebound in Dairy Prices

Sterling also beat a hasty retreat against the New Zealand Dollar on Tuesday morning as the DUP refused to budge on its stance over the Irish border.

The Pound’s attempts to rally in the afternoon were also thwarted by a rebound in dairy prices at the latest global auction, strengthening the ‘Kiwi’ as it ended a string of declines in the price of New Zealand’s largest export.

Looking ahead, a lull in notable domestic data is likely to leave NZD vulnerable to external influences for the remainder of this week, with a dip in commodity prices likely to weigh on the currency.

 

Upcoming Data

 

Wednesday, 06 December, 2017

08:30              DE Construction PMI (Nov)

09:10              DE Retail PMI (Nov)

09:10              EU Retail PMI (Nov)

13:15              US ADP Employment Change (Nov)

15:00              CA Bank of Canada Rate Decision

22:30              AU Construction PMI (Nov)

 

Joe Mayhew

Currency Dealer

T: (0) 1442 892 069

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