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UK Retail Weakness Weighs on Sterling, US Dollar Remains Weak on US Politics

Pound News: Brexit Uncertainties and Anticipation for Progress Limits Sterling Strength

Throughout last week, the Pound saw limited movement as investors were hesitant to move much on the British currency while Brexit uncertainties are at their worst with mere months until the UK is set to leave the EU.

Sterling benefitted slightly from weakness in rivals such as the US Dollar towards the end of the week, but other factors such as signs of weaker-than-expected holiday season activity at UK retailers weighed on the Pound.

No notable UK data will be published today and the Pound is likely to end 2018 near its worst levels against some major rivals. Analysts are anticipating any potential UK political developments that could occur now that the holiday period is coming to an end.

Euro News: Slowing German Inflation Keeps a Lid on Euro Strength

The Euro benefitted from weakness in its rival the US Dollar (USD), towards the second half of last week and was able to advance against the Pound as a result.

However, GBP/EUR was able to rebound slightly from near weekly lows due to the latest German inflation stats which fell short of expectations. German inflation was forecast to come in at 1.9% year-on-year but instead slowed to just 1.7%. The data weighed slightly on European Central Bank (ECB) interest rate hike bets and the Euro.

No notable Eurozone data will be published today. The shared currency will react to US Dollar strength but movement may be volatile as markets will be quieter until the holiday period ends on Wednesday.

US Dollar News: US Data Fails to Bolster US Dollar Demand

The Pound to US Dollar exchange rate spent most of last week trending higher, as concerns surrounding the US government shutdown and signs of slowing global growth left the US Dollar unappealing.

Political analysts believe the US government shutdown will run through into the New Year. Friday’s US data, which included stronger-than-expected Chicago PMI data, failed to make the US Dollar more appealing amid political and growth concerns.

US Dallas Fed manufacturing data will be published today, but US Dollar investors are highly anticipating potential US political developments regarding the US government shutdown.

Canadian Dollar News: Weaker Oil Prices Keep Pressure on CAD

Investors have had little reason to buy the Canadian Dollar this week as global growth concerns and weaker commodity prices made investors hesitant to buy risky trade-correlated currencies like the Canadian Dollar.

Oil prices rebounded slightly on Friday, but with concerns of oversupply persisting the oil-correlated Canadian Dollar was unable to capitalise.

More Canadian data will be published this week, but with no notable news expected today the Canadian Dollar is more likely to react to US Dollar strength and commodity trade developments.

Australian Dollar News: China Growth Jitters Weigh on ‘Aussie’

The Pound to Australian Dollar exchange rate was able to sustain gains last week, as concerns about slowing global growth and US political jitters made investors hesitant to take risks. This left the risky trade-correlated Australian Dollar looking unappealing.

However, perhaps the biggest weight on the Australian Dollar last week was some underwhelming Chinese data indicating that China’s economy was slowing. As China is Australia’s biggest trade partner, the ‘Aussie’ is commonly seen as a proxy for Chinese economic sentiment.

Australian Dollar investors are more likely to remain focused on global growth jitters and Chinese data than stay focused on today’s Australian private sector credit data for long.

 

Upcoming Data

Monday, 31st December

12:30    Australian Private Sector Credit

15:30    US Dallas Fed Manufacturing Index

16:30    US 6-Month and 3-Month Bill Auctions

 

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

 

Joe Mayhew

Currency Trader

Jam@fcgworld.co.uk

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