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US Tax Bill Pressures US Dollar, GBP Down on Barnier Comments

Pound News: GBP Slumps as Barnier Blocks Special Deal for London

The Pound (GBP) tumbled against the majority of its peers on Tuesday as investors reacted poorly to the news that the City of London will be given no special treatment in Brexit.

The EU’s chief negotiator Michel Barnier told the Guardian yesterday that there would be no ‘bespoke’ agreement that would allow London to retain its financial passport if the UK leaves the single market.

Looking ahead, Sterling may slip again later today with the release of CBI’s distributive trade index, which is expected to reveal that retail sales slipped slightly in December.

Euro News: EUR Weakens as Inflation Fails to Impress

The Pound to Euro (GBP/EUR) exchange rate tumbled by around half a cent on Tuesday as concerns over the future of London’s financial sector drove the pairing lower.

Meanwhile, the single currency was able to advance yesterday despite a slight dip in German business morale in December as the index still struck its second best level for the year.

However, the single currency may be forced to relinquish some of these gains later today with the release of Germany’s latest PPI figures as economists forecast that price growth will have slowed from 0.3% to 0.2% in November.

US Dollar News: USD Weakened as Investor Urge Caution on US Tax Bill

The Pound to US Dollar (GBP/USD) exchange rate slipped yesterday as Barnier’s comments weighed on Sterling sentiment.

However the ‘Greenback’s gains were tempered somewhat as currency markets became increasingly cautious over the prospect of the US Congress passing Trump’s long awaited tax reforms.

Meanwhile, on the data front the US Dollar may strengthen later today with the release of the latest US existing home sales figures as economists forecast that sales will have risen again in November.

Canadian Dollar News: CAD Slips as Oil Prices Retreat

The Pound initially tumbled against the Canadian Dollar (GBP/CAD) on Tuesday as Brexit concerns pressured the UK currency.

However the ‘Loonie’ was unable to stabilize at its best levels, with CAD slipping after a potential oil worker strike in Nigeria was called off, causing oil prices to retreat again on Tuesday as supply concerns abated.

However, the Canadian Dollar may be able to recoup some of these losses on Wednesday afternoon, with analysts predicting that domestic wholesale trade sales will have rebounded from -1.2% to 0.5% in October.

Australian Dollar News: AUD Relinquishes Gains as Risk Appetite Slides

The Pound to Australian Dollar (GBP/AUD) exchange rate slumped at the start of Tuesday’s session as rising commodity prices and a bout of weakness in USD bolstered the appeal of the ‘Aussie’.

However the Australian Dollar failed to hold on to its gains later in the day as markets became increasingly risk adverse in the face of the US tax changes.

Looking forward, however, the ‘Aussie’ could quickly rally over the course of Wednesday’s session if iron ore prices continue rising, with the ongoing production cuts in Chinese steel mills expected to continue bolstering the commodity.

New Zealand Dollar News: NZD Sinks as Dairy Prices Plummet

Sterling jumped by over half a cent against the New Zealand Dollar (NZD) on Tuesday following a sharp drop in prices at the latest global dairy auction.

After appearing to show some signs of a recovery at the last auction, as diary prices rose 0.4%, NZD investors were concerned to see that prices for New Zealand’s main export slumped by a whopping -3.9% yesterday.

Looking ahead the New Zealand Dollar is likely to weaken again with the release of New Zealand’s latest growth reading, with domestic GDP expected to have tumbled from 0.8% to 0.5% in the third quarter.

Upcoming Data

 

Wednesday, 20 December, 2017

08:00              DE PPI

11:00              UK CBI Distributive Trades

13:30              Wholesale Trade Sales

15:00              US Existing Home Sales

21:45              NZ GDP

James Baxter

Currency Dealer

01442 892 062

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