Brexit jitters look set to keep the pound under pressure for the foreseeable future as investors continue to weigh up the odds of the UK leaving the EU without a deal.
Signs of softer inflation could weigh down pound
Canadian dollar vulnerable to weaker wage growth
Lack of fresh US labour market tightening to dent US dollar
Bank of England inflation survey to dent pound demand
The pound could struggle to hold onto its recent bout of support today if the Bank of England (BoE)/TNS inflation attitudes survey fails to encourage investors.
Signs that domestic sentiment and inflation expectations are weakening could put GBP exchange rates under fresh pressure.
As any softening in inflation would give the BoE further incentive to leave interest rates on hold for longer this would weigh heavily on the mood towards the pound.
Even so, bets on the prospect of the UK avoiding a no-deal Brexit are still likely to offer support to GBP exchange rates ahead of next week’s parliamentary vote.
Weaker wage growth may drive Canadian dollar lower
After a week of weakness the Canadian dollar is looking for a boost on the back of this afternoon’s labour market data.
With confidence in the outlook of the Canadian economy already limited any disappointment in day’s jobs data would leave the Canadian dollar exposed to fresh selling pressure.
As forecasts point towards a slight easing in average hourly wages this could drag CAD exchange rates down, with weaker wage growth further undermining the prospect of the Bank of Canada (BOC) raising interest rates again.
On the other hand, any tightening of the labour market could help the Canadian dollar to recover some of its recent losses.
US dollar vulnerable to labour market easing
Risk aversion helped to keep the US dollar on a stronger footing yesterday, with markets spooked by signs of a fresh escalation in US-China trade tensions.
USD exchange rates may lose some of their momentum, however, if November’s non-farm payrolls show an easing on the month.
Evidence that the US labour market is struggling to tighten further would support the case for the Federal Reserve to leave interest rates on hold for longer in 2019.
With markets increasingly fearful of the prospect of a potential US recession and increased protectionism the US dollar may struggle to find many gains ahead of the weekend.
Friday, 7th December 2018
09:30 GBP Bank of England/TNS Inflation Attitudes Survey
13:30 CAD Unemployment Rate
13:30 USD Change in Non-Farm Payrolls
Joining the corporate trading desk in 2007, Phil now over sees all of Currencies Direct’s corporate dealing activity. Having gained experience working with hundreds of businesses to optimise international payments processes and execute comprehensive risk management strategies, Phil currently works with a portfolio of corporate clients whilst managing Currencies Direct’s overall market exposure
Phil has FCA approval and has completed the Certificate in International Treasury Management (CertiTM)