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Sterling Fluctuates on Brexit Speculation as Investors Anticipate Volatile January

Pound News: Sterling Briefly Climbs on Reports that UK MPs Aim to Avoid ‘No-Deal Brexit’

Markets were closed yesterday to observe the New Year’s Day holiday, but Monday saw the Pound advancing against most major rivals in reaction to fresh Brexit speculation from the weekend.

A report emerged claiming that senior UK ministers from the Conservative and Labour Parties were aiming to force the UK government to delay the Brexit process in the event that UK Prime Minister Theresa May’s Brexit plan fails to pass through UK Parliament.

The UK Parliament debate on May’s Brexit plan will not resume until next week, but any surprising developments or speculations on the Brexit process will continue to drive Sterling in the coming sessions.

As markets reopened after the New Year break, Sterling gave up its recent gains, with the currency sliding against the euro, US dollar, New Zealand dollar and Canadian dollar.

Euro News: Euro’s 20th Birthday Clouded by Eurozone’s Economic Uncertainties

New Year’s Day also marked 20 years since the Euro entered circulation in 11 EU nations, but there isn’t much on the near horizon for Euro investors to be bullish about.

Much of the Euro’s recent strength has been due to weakness in rivals like the Pound and US Dollar, but the European currency’s outlook is still shrouded by concerns about slowing Eurozone economic growth and fears that price pressures may not be as strong as the European Central Bank (ECB) has forecast.

This week’s Eurozone inflation data and Germany’s unemployment report could prove influential.

US Dollar News: Federal Reserve Uncertainties Keep Pressure on US Dollar

Last week, investors avoided the US Dollar due to concerns that the Federal Reserve’s US interest rate outlook is not taking concerns of slowing global growth into account.

Uncertainties about the Fed’s policy outlook have continued to keep pressure on the US Dollar this week.

Influential US data is due out over the remainder of the week, with ISM’s key US manufacturing PMI report due for publication today. If the data beats expectations it could bolster confidence in the Fed outlook and strengthen the US Dollar.

Canadian Dollar News: Oil Prices in Focus

The Pound to Canadian Dollar exchange rate climbed at the beginning of the week.
The Canadian Dollar had a bearish December due to plummeting oil prices, although the Pound has slipped slightly against the ‘Loonie’ today.

Canadian manufacturing PMI data from December will be published today and could give the Canadian Dollar some support if it impresses.

Australian Dollar News: ‘Aussie’ Struggles to Recover at End of Bearish 2018

The Australian Dollar ended 2018 as one of the year’s worst-performing major currencies, as it was throttled by concerns about US-China trade tensions throughout the year.

Signs that there has been progress in US-China trade talks has done little to make the Australian Dollar more appealing so far, as concerns of slowing global growth and weaker growth in China have kept the risky ‘Aussie’ under pressure.

There is no Australian data for investors to react to today, so the Pound to Australian Dollar exchange rate will be influenced by UK news and potential shifts in global market risk-sentiment.

 

Upcoming Data

Wednesday, 2nd January

09:00    Eurozone Manufacturing PMI

09:30    UK Manufacturing PMI

14:30    Canadian Manufacturing PMI

15:00    US Manufacturing PMI

 

Alastair Archbold

FX Manager

aja@fcgworld.co.uk

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