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Sterling Strengthens as Factory Orders Hold Steady in December

Pound News: GBP Bolstered by CBI Data

The Pound (GBP) was able to strengthen against the majority of its peers at the start of this week’s session as the Confederation for British Industry’s (CBI) monthly industrial orders balance beat expectations.

CBI’s factory orders index held at 17 in December, beating expectations it would slip to 14 and causing order growth to strike a 30-year high in the final quarter of the year as output remained strong.

Looking ahead the Pound may be able to strengthen again later this morning with the release of the CBI’s distributive trades index, should it also beat expectations.

Euro News: EUR Weakens as Inflation Fails to Impress

The Pound to Euro (GBP/EUR) advanced on Monday as the Eurozone’s latest CPI figures revealed that inflation only showed a modest improvement last month, rising from 1.4% to just 1.5%.

This means that inflation remains well below the European Central Bank’s (ECB) target rate of 2% and with core inflation holding at a five-month low of 0.9% it suggests that it may stay that way for a while.

However the single currency may be able to recoup some of its losses later today if Germany’s business climate index holds at an all-time high of 117.5 as expected.

US Dollar News: USD Subdued as Markets Await US Tax Deal

The Pound to US Dollar (GBP/USD) exchange rate surged yesterday as a subdued ‘Greenback’ was unable to stave off Sterling’s advances on the back of the upbeat CBI data.

The weakness in the US Dollar comes as investors adopt a wait and see approach to US tax reforms, with markets fearing that there could still be some roadblocks that prevent the tax bill from being signed in this week.

At the same time, USD investors may also remain wary this week as the possibility of a government shutdown looms, something which would undoubtedly delay Trump’s tax changes.

Canadian Dollar News: CAD Slips on Cautious Outlook from Poloz

The Pound raced higher against the Canadian Dollar (CAD) at the start of this week following remarks from Bank of Canada (BoE) Governor Stephen Poloz.

In an interview with Globe and Mail over the weekend Poloz appeared a little wary over increasing the pace of rate hikes next year as he warned that tightening monetary policy too quickly could lead to a ‘deflationary scenario’.

Meanwhile the ‘Loonie’ is likely to find its movement dictated by oil prices today as a lull in domestic data leaves the currency will little else to drive momentum.

Australian Dollar News: AUD Slips as Domestic Growth Forecasts Revised Down

The Pound to Australian Dollar (GBP/AUD) exchange rate strengthened by around half a cent on Monday following the UK’s unexpectedly robust factory orders figures.

Meanwhile the ‘Aussie’ was pressured yesterday by the Australian government’s latest growth forecasts as it now expects GDP for the 2017/18 financial year to only strike 2.5%, revised down from 2.75% as consumer consumption plummeted in the second half of the year.

However the Australian Dollar may be able to recoup its losses today if the recent uptick in iron ore prices persists.

 

Upcoming Data

Tuesday, 19 December, 2017

09:00              DE Business Climate

11:00              UK CBI Distributive Trades

13:30              US Current Account

15:30              NZ Global Dairy Auction

Joe Mayhew

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