As geopolitical tensions between the East and West rise, sanctions and souring relations could have lasting impacts on business globally.
- Brexit speculation bolsters pound
- Euro under pressure as Eurozone economic sentiment declines
- Higher consumer inflation expectations fail to weigh on US dollar
Pound looks for further gains on inflation uptick
Frenzied speculation over the possibility of an imminent breakthrough on Brexit saw the pound surge yesterday.
Although senior EU officials indicated that there was still a ‘quite wide’ gap between the two sides this failed to prevent GBP exchange rates leaping.
Further gains could be in store for the pound this morning if September’s UK consumer price index picks up as forecast on the year.
As a higher headline inflation rate could encourage the Bank of England (BoE) to avoid cutting interest rates a stronger showing here may boost GBP.
Narrowed trade surplus forecast to weigh on euro
As the ZEW economic sentiment indexes remained deeply in negative territory, in spite of bettering forecasts, the euro fell further out of favour on Tuesday.
With economic confidence still decidedly lacking at the start of the third quarter the risk of a prolonged slowdown rose.
The mood towards the single currency could sour further this morning with the release of the latest Eurozone trade balance.
Investors expect to see the trade surplus narrow sharply on the month, highlighting the negative impact that deteriorating global trade tensions are still having on the Eurozone economy.
US dollar vulnerable to retail sales slowdown
September’s US consumer inflation expectation report had little impact on the US dollar yesterday as markets have already effectively priced in the impact of an imminent Federal Reserve interest rate cut.
However, USD exchange rates may falter if US retail sales data shows signs of slowing this afternoon.
Evidence that consumers are adopting a more cautious outlook in the face of ongoing trade tensions would further undermine confidence in the US economy, putting a dampener on the US dollar.
Wednesday, 15th October 2019
09:30 GBP Consumer Price Index
10:00 EUR Eurozone Trade Balance
13:30 USD Retail Sales
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)