As geopolitical tensions between the East and West rise, sanctions and souring relations could have lasting impacts on business globally.
- Pound shrugs off weaker credit conditions survey
- Signs of ECB optimism lift euro
- Manufacturing index boosts US dollar
UK retail sales rebound could inspire pound gains
News that credit conditions softened in the fourth quarter had little impact on the pound yesterday, with the deterioration offering little surprise to investors.
As markets have already priced high odds of an imminent Bank of England (BoE) interest rate cut into GBP exchange rates this limited the credit survey’s impact.
The pound could rally if December’s UK retail sales figures improve as forecast.
Evidence that consumer sentiment picked up in the wake of the snap general election may offer hope of a stronger fourth quarter growth performance, boosting GBP exchange rates.
Rising Eurozone construction output set to boost euro
December’s European Central Bank (ECB) meeting minutes proved more optimistic in tone, encouraging the euro to record fresh gains.
As policymakers noted evidence of economic stabilisation within the Eurozone this fuelled hopes that the ECB could adopt a less dovish outlook in the coming year.
The single currency may find additional support if November’s Eurozone construction output picks up as anticipated.
US production weakness forecast to weigh on US dollar
An unexpected surge in the Philadelphia Fed manufacturing index offered the US dollar a leg up on Thursday.
With markets also showing a muted reaction to the details of the phase one US-China trade agreement USD exchange rates benefitted from a deterioration in market risk appetite.
Confidence in the economic outlook could receive a blow this afternoon, however, as forecasts point towards a monthly decline in manufacturing and industrial production.
Any evidence that the US manufacturing sector slowed in the final month of 2019 would leave the US dollar exposed to selling pressure.
Friday, 17th January 2020
09:30 GBP Retail Sales
10:00 EUR Eurozone Construction Output
14:15 USD Industrial Production
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)