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Pound Volatile vs. US Dollar after Flash Crash

Last week’s high: $1.2855

Last week’s low: $1.2481

GBP/USD Fluctuates by 4 Cents

The Pound US Dollar exchange rate experienced extreme volatility last week as a mini flash crash rocked the currency market.

Although the Pound lost over 1% against the US Dollar mid-week, GBP was able to claw back much of its losses in spite of mixed UK data.

The UK Markit Manufacturing PMI for December showed a better-than-expected increase to 54.2, but analysts attributed this to stockpiling as a result of Brexit concerns.

The UK’s manufacturing data was followed by a weaker-than-expected construction reading and an above-forecast services report.

The US Dollar, meanwhile, came under a little pressure as disappointing economic releases inspired concerns about the US economy.

USD Outlook: Brexit to Dominate GBP Sentiment

Looking to the week ahead, Brexit debates are set to take centre stage once again, as the House of Commons and Prime Minister Theresa May resume discussions over the Brexit withdrawal deal.

USD investors, meanwhile, will be looking ahead to next week’s slew of data releases. Any reports which indicate that the US economy is feeling the strain would be US Dollar-negative.

Next week will also see President Donald Trump meet with China’s President Xi Jinping to negotiate potential trade deals, with investors paying attention to any signs of a compromise between the two leaders.

 

Key Events

7th January

15:00 US ISM Non-Manufacturing PMI (Dec)

15:00 US Factory Orders (Nov)

17:40 US FOMC Member Bostic Speech

8th January

13:30 US Trade Balance (Nov)

9th January

15:30 UK BoE’s Governor Carney Speech

19:00 US FOMC Minutes

10th January

00:01 UK BRC Like-For-Like Retail Sales (Dec)

09:30 UK BoE Credit Conditions Survey

13:30 US Continuing Jobless Claims (Dec 28)

13:30 US Initial Jobless Claims (Jan 4)

17:00 US Fed’s Powell Speech

22:30 US FOMC Member Clairda Speech

11th January

07:00 Manufacturing Production (Nov)

09:30 Trade Balance; Non-EU (Nov)

09:30 Gross Domestic Product (Nov)

13:30 US Consumer Price Index Ex Food & Energy (Dec)

 

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To keep up to date with the US Dollar, visit the USD blog in our Currency News section.

 

Alastair Archbold

Foreign Exchange Manager

aja@fcgworld.co.uk

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