As geopolitical tensions between the East and West rise, sanctions and souring relations could have lasting impacts on business globally.
- Pound rallies thanks to surge in business optimism
- Euro slips as US threatens fresh tariffs on EU exports
- Higher inflation rate set to lift New Zealand dollar
Jump in UK business optimism buoys pound
An unexpected surge in the first quarter CBI business optimism index helped GBP exchange rates gain across the board yesterday.
The index rebounded from -44 to 23, reflecting a significant recovery in business sentiment and catching investors off guard.
However, the pound may struggle to hold onto those gains for long today thanks to a lack of fresh domestic data.
Lingering worries over the risk of a hard Brexit scenario could also put pressure on GBP exchange rates as markets watch the latest comments from senior Conservatives.
Threat of US tariffs weighs on euro
The Trump administration’s latest threats to impose additional tariffs on EU exports saw the euro stumble yesterday.
With the Eurozone economy already showing the negative impact of weaker global trade the prospect of additional disruption left the single currency on the back foot.
This afternoon’s European Central Bank (ECB) policy announcement is unlikely to offer EUR exchange rates any particular rallying point, however.
As long as the ECB maintains a neutral policy bias the potential for a euro recovery is may prove limited.
Rising inflation set to shore up the New Zealand dollar
With market risk appetite weakening the New Zealand dollar fell further out of favour with investors on Wednesday.
However, demand for the risk-sensitive NZD could improve this evening thanks to the release of the fourth quarter consumer price index.
The headline inflation rate is expected to show a solid uptick from 1.5% to 1.8% on the year, potentially boosting NZD.
Thursday, 23rd January 2020
12:45 EUR European Central Bank Rate Decision
15:00 USD Leading Index
21:45 NZD Consumer Price Index
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)