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UK business sentiment recovery to extend pound rally

business-articlesUK business sentiment recovery to extend pound rally
  • Steady UK wage growth supports pound
  • Canadian dollar slides in anticipation of BOC meeting
  • US dollar muted thanks to latest Fed criticism
 
 
Improved UK business optimism set to shore up pound
 
Confidence in the pound picked up yesterday as UK average weekly earnings unexpectedly held steady in the three months to November.
 
A better-than-expected unemployment benefit claimant count also helped to shore up GBP exchange rates, suggesting that the UK labour market is strengthening.
 
Further gains could be in store for the pound this morning if the latest CBI business optimism index picks up as forecast.
 
After the dismal showing of -44 seen in the fourth quarter any solid uptick could keep the pound on a positive trend against its rivals.
 
 
Canadian dollar softens ahead of BOC rate decision
 
A drop in November’s manufacturing sales figure left the Canadian dollar on a weaker footing as worries over the health of the Canadian economy grew.
 
The mood towards the Canadian dollar looks set to remain muted today as markets brace for the Bank of Canada’s (BOC) policy announcement.
 
Although no change in interest rates seems likely at this stage, any signs of increased dovishness among policymakers could weigh on CAD exchange rates.
 
A softening of the monthly consumer price index could put additional pressure on the Canadian dollar.
 
 
Signs of weaker manufacturing sector to weigh on US dollar
 
The appeal of the US dollar was limited as the Federal Reserve came under fire from the Trump administration once again.
 
Fears that the Fed could return to a policy loosening bias in the months ahead could grow in response to December’s Chicago Fed national activity index.
 
With forecasts pointing towards a negative reading confidence in the strength of the US manufacturing sector looks set to weaken.
 
Unless the sector can demonstrate resilience in the face of ongoing global trade tensions USD exchange rates could struggle to gain ground this afternoon.
 
 
Upcoming Data:
 
Wednesday, 22nd January 2020

11:00 GBP CBI Business Optimism Index
13:30 CAD Consumer Price Index
13:30 USD Chicago Fed National Activity Index
15:00 CAD Bank of Canada Rate Decision
 
 
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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