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Pound down from best levels on Irish border issues

business-articlesPound down from best levels on Irish border issues
  • GBP gains prove short-lived
  • Fall in retail sales could weaken EUR exchange rates
  • Australian dollar gains after RBA rate decision
Pound volatile on Brexit deal speculation  

Sterling stormed higher on Monday amid rumours that UK Prime Minister Theresa May had been successful in securing a Brexit divorce deal.

However, while European Commissioner Jean-Claude Juncker stated that the meeting wasn’t a failure, it emerged that the Northern Irish DUP party had rejected May’s proposal for solving the Irish border issue.

GBP exchange rates accordingly fell from their best levels.

If a deal is struck this week, the pound will rebound, but further delays would be Sterling-negative.

The pound could also come under pressure this morning if the UK’s services PMI shows the decline in output forecast by economists.

EUR could slide on Eurozone data

The Euro could be pressured lower today by the release of the Eurozone’s latest retail sales figures.

Consumer spending in the currency bloc is believed to have fallen by -0.7% on the month in October, taking the annual retail sales figure from 3.7% to 1.6%.

Such a significant fall in sales would be EUR-negative.

Meanwhile, tomorrow’s German factory orders data figure is expected to come in at 7.0% on the year, down from 9.5% in September.

Germany is also set to publish its retail and construction PMIs for November.

AUD exchange rates climb after RBA comments

The Australian dollar broadly strengthened in the wake of the Reserve Bank of Australia’s (RBA) interest rate decision.

While the RBA left interest rates on hold, some of the central bank’s comments were received positively.

On the subject of wage growth, Governor Philip Lowe stated; ‘There are reports that some employers are finding it more difficult to hire workers with the necessary skills. However, wage growth remains low. This is likely to continue for a while yet, although the stronger conditions in the labour market should see some lift in wage growth over time.’

The Australian dollar rallied by over 1% against the pound and more than 0.5% against the US dollar.

The Australian dollar could extend gains tomorrow if Australia’s third quarter growth data impresses.

Upcoming Data
Wednesday, 06 December, 2017

00:30             AUD Gross Domestic Product (QoQ) (Q3)       
07:00             EUR German Factory Orders (YoY)              
08:30             EUR Markit German Construction PMI  
13:15             USD ADP Employment Change  
22:30             AUD AiG Performance of Construction Index   
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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