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Further pound volatility likely as Brexit dominates headlines

business-articlesFurther pound volatility likely as Brexit dominates headlines
  • Pound to remain volatile as Brexit developments unfold
  • Narrowed Eurozone trade surplus to weigh on euro
  • US dollar to capitalise on solid retail sales data
 
 
Brexit speculation expected to drive further pound volatility today
 
Developments surrounding Brexit are expected to remain the primary influence on GBP exchange rates today, with markets anxious to see whether the agreement will win the support of MPs.
 
Nevertheless, the pound could find a rallying point this morning if October’s UK retail sales data improves as forecast.
 
Investors expect to see sales excluding auto fuel rebound from September’s -0.8% monthly decline with growth of 0.2%.
 
Evidence that UK consumers are beginning to spend again would encourage greater confidence in the economic outlook, offering the pound a boost against its rivals.
 
 
Fresh euro losses possible on narrowed Eurozone trade surplus
 
After the disappointing 0.2% contraction in the third quarter German gross domestic product the euro looks vulnerable ahead of today’s Eurozone trade balance figure.
 
Another weaker showing would encourage investors to continue pulling out of the single currency.
 
A narrowing of the trade surplus would highlight the challenges facing the currency union in the months ahead, confirming the negative impact that global trade tensions have had on the Eurozone.
 
Unless the surplus widens EUR exchange rates look set to maintain a negative bias this morning.
 
 
Solid retail sales to support US dollar exchange rates
 
Confidence in the outlook of the US economy may pick up further this afternoon thanks to October’s advance retail sales data.
 
Forecasts point towards sales growth of 0.5% on the month, an improvement over September’s more muted performance.
 
As long as the world’s largest economy continues to demonstrate signs of strength the mood towards the US dollar is likely to remain positive.
 
However, a resurgence in market risk appetite may still limit the appeal of the US dollar in the near term.
 
 
Upcoming Data:
 
Thursday, 15th November 2018
09:30 GBP Retail Sales
10:00 EUR Eurozone Trade Balance
13:30 USD Advance Retail Sales
 
Philip McHugh

Philip McHugh

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)

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