Worries over the health of the German economy continued to mount as signs from manufacturing data pointed towards a fourth quarter slowdown.
Sterling is walking back some of these gains this morning however, with GBP/EUR falling back to €1.1996, GBP/USD dropping to $1.3405, and GBP/CAD easing to C$1.7648. GBP/AUD and GBP/NZD have also retreated, striking AU$1.9369 and NZ$2.0258 respectively.
Looking ahead, we expect the pound to remain front and centre today as markets digest the impact of the Tories’ commanding win.
What’s been happening?
The pound spent much of Thursday on the back foot, retreating throughout the European session in response to some last minute fears of a hung parliament.
These were swiftly put to bed with the publication of the exit poll however, with Sterling rocketing higher as the Tories were predicted to claim a commanding election victory.
This carried GBP/EUR to a new three-year high at €1.20 and saw GBP/USD briefly break through to $1.35.
Meanwhile, the euro was mostly muted on Thursday as the European Central Bank (ECB) concluded its final policy meeting of 2019.
With the ECB leaving interest rates on hold this month the focus was mostly on Christine Lagarde as she presided over her first meeting as ECB president.
While she offered no real surprises, one memorable moment saw Lagarde proclaim that she is neither a policy hawk nor a dove and will rather aim to be an ‘Owl’, ‘associated with a little bit of wisdom’.
Finally, the US dollar was offered some modest support yesterday amid renewed hopes for a US-China trade deal after President Trump claimed on Twitter that a he is ‘getting very close to a big deal with China’.
What’s coming up?
The pound will be in the spotlight today, with some profit taking potentially trimming Sterling’s gains.
Also in focus will be the publication of the latest US retail sales figures later this afternoon.
These may offer some support to the US dollar if sales growth accelerated in November as forecast by economists.
Meanwhile, a slight uptick in Italian industrial orders may deliver some modest gains to the euro this morning.
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)