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Will UK growth data weaken pound?

business-articlesWill UK growth data weaken pound?
  • UK GDP ahead
  • Solid non-farm payrolls report shores up US dollar
  • Lower unemployment rate fails to boost Canadian dollar
 
UK growth data in the spotlight
 
The pound made some fleeting gains on Friday, firming through most of the day before falling sharply at the end of the European session after US vice-president Mike Pence warned a UK-US trade deal could be at risk due to Boris Johnson’s decision to involve Huawei in the role out of the UK’s 5G network.

Top of the agenda this week will be the publication of the UK’s latest GDP figures.

Outside of a significant pick-up in growth in December it’s highly likely the Office of National Statistics (ONS) will report that UK growth stalled in the last quarter of 2019.

As such we expect to see the pound trend lower through the first half of this week’s session.
 
US dollar benefits from surge in non-farm payrolls
 
Friday’s non-farm payrolls report bettered forecasts, showing that the US economy added 225,000 jobs in January.
 
The US dollar found fresh support on the back of the labour market data even though the unemployment rate also edged up from 3.5% to 3.6%.
 
With markets still concerned by the unfolding impact of the Wuhan coronavirus outbreak, USD exchange rates also benefitted from a general sense of safe-haven demand.
 
However, a weaker showing from this afternoon’s consumer inflation expectation survey could see the US dollar stumble.
 
 
Building permits rebound to offer Canadian dollar boost
 
Although the Canadian unemployment rate saw a surprise improvement in January this move was largely driven by a decline in the participation rate.
 
With the labour market continuing to show signs of struggling investors saw little reason to support the Canadian dollar last week.
 
A rallying point could be in store for CAD exchange rates, however, if December’s building permits figure bounces back as forecast.
 
Evidence of greater resilience within the domestic construction sector could limit the risk of further Canadian dollar losses, particularly if market risk appetite remains muted.
 
 
Upcoming Data:
 
Monday, 10th February 2020
13:30 CAD Building Permits
16:00 USD Consumer Inflation Expectations
 
 
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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