As geopolitical tensions between the East and West rise, sanctions and souring relations could have lasting impacts on business globally.
- Rising Brexit anxiety drags on pound
- Euro under pressure thanks to Bundesbank’s German growth warning
- Higher oil prices boost Canadian dollar
Pound vulnerable to slowdown in UK wage growth
GBP exchange rates came under renewed pressure yesterday as fears of a hard Brexit scenario picked up, driven by comments from Conservative MPs.
As ratings agency Moody’s also issued a warning that UK gross domestic product is likely to slow to 1% in 2020 the mood towards the pound soured further.
With forecasts pointing towards a slight loss of momentum in the latest UK wage growth figures GBP exchange rates could shed further ground this morning.
Any slowdown in wage growth could give Bank of England (BoE) policymakers fresh incentive to cut interest rates, leaving the pound exposed to further downside potential.
Signs of Eurozone economic confidence could boost euro
The Bundesbank’s latest monthly report offered the euro little cause for confidence on Monday, with the central bank indicating that 2019 was Germany’s weakest year of growth since 2013.
With growth in the Eurozone’s powerhouse economy slowing to its lowest level since the Eurozone debt crisis support for the single currency naturally weakened.
However, EUR exchange rates may find a rallying point this morning if January’s ZEW economic sentiment indexes improve as forecast.
Evidence of stronger economic confidence within Germany and the wider Eurozone could encourage the euro to recover some of its lost ground today.
Canadian dollar losses forecast on weaker manufacturing sales
An uptick in oil prices helped to encourage CAD exchange rate gains at the start of the week, with the shutdown in Libyan production buoying the oil market.
Even so, the Canadian dollar may struggle to hold onto those gains for long as markets anticipate a fresh slowdown in November’s manufacturing sales data.
A weaker month of sales would exacerbate existing doubts over the resilience of the Canadian economy, leaving the Canadian dollar vulnerable to renewed selling pressure.
With confidence in the global growth outlook already limited any signs of a domestic slowdown could weigh heavily on CAD exchange rates.
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)