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Sterling Fails to Capitalise on Brexit Hopes, US Dollar Rebounds Following Days of Losses

Pound News: UK Amendment to Block ‘No-Deal’ Brexit Fails to Impress Investors

The Pound saw demand slip yesterday as investors ignored hopes that UK politicians were looking for ways to avoid a ‘no-deal’ Brexit.

A cross-party group of MPs tabled an amendment which would pressure the UK government to avoid willingly heading towards a ‘no-deal’ situation. The amendment would limit UK government funding in the event of no trade deal being in place. However, lasting concerns about how close the Brexit endgame is with no clear outcome in sight, limited Sterling appeal.

Britain’s final Q3 labour productivity report will be published today. Even more notable though, Parliament will debate Prime Minister Theresa May’s Brexit deal today, which could influence Sterling.

Euro News: Eurozone Confidence Slumps but Euro Remains Sturdy

Yesterday’s Eurozone data failed to impress investors, with most notable prints falling short of expectations. German industrial production from November and the Eurozone’s December confidence stats all printed lower than forecast.

Despite this though, the Euro was able to avoid losses versus Sterling. Demand for the shared currency was supported by strong Eurozone retail stats published at the beginning of the week.

German trade data and Eurozone unemployment rate stats from November will be published today. If these fall short of expectations too, the Euro’s appeal may thin and the Pound to Euro exchange rate could recover.

US Dollar News: US Dollar Rebounds as Investors Anticipate Political Developments

Following several consecutive days of losses for the US Dollar in recent sessions, demand for the US currency rebounded slightly on Tuesday. Investors returned to the US currency amid market uncertainties ahead of expected political developments.

Investors spent much of yesterday’s session anticipating a speech from US President Donald Trump, as well as reacting to news that the latest round of US-China trade negotiations would run a little longer than expected.

As the latest US-China trade talks are set to conclude today, US Dollar investors may react to any potential developments. This evening’s Federal Reserve meeting minutes may also be highly influential, as the Fed’s tone in its December policy decision was met with market confusion.

Canadian Dollar News: GBP/CAD Down Despite Mixed Trade News

The Canadian Dollar’s strength was limited yesterday by news that Canadian exports were weaker in November than expected, and that the nation’s trade deficit had deepened.

On the other hand, the Canadian Dollar was able to keep pushing GBP/CAD lower thanks to stronger prices in oil, Canada’s most lucrative commodity, as well as optimism towards US-China trade negotiations.

Canadian Dollar demand is also limited by market anticipation for today’s Bank of Canada (BoC) policy decision. If the bank takes a more cautious stance on Canadian monetary policy, the Canadian Dollar could weaken.

Australian Dollar News: US-China Trade Hopes Keep ‘Aussie’ Supported

The Pound failed to benefit enough from Brexit hopes to climb against the Australian Dollar, as the Pound to Australian Dollar exchange rate trended near weekly lows yesterday afternoon.

Demand for the risk-correlated Australian Dollar was supported by market optimism that US-China trade negotiations were progressing, and were little affected by yesterday’s mixed Australian trade results.

Australian Dollar investors will be reacting to today’s Australian building permits report, and the Federal Reserve’s latest meeting minutes results this evening may also have an impact on risk-sentiment.

Upcoming Data

 

Wednesday, 9th January

12:30    Australian Building Permits

07:00    German Trade Balance

07:45    French Consumer Confidence

09:30    UK Labour Productivity

10:00    Eurozone Unemployment Rate

13:15    Canadian Housing Starts

15:00    Bank of Canada Policy Decision

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To keep up to date with the Euro, visit the EUR blog in our Currency News section.

 

Adam Wiffen

Senior Currency Broker

aww@fcgworld.co.uk

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