The pound fell sharply yesterday after the UK inflation rate jumped from 7% to 9% – its highest level since 1982.
Even though the two sides finally signed off on their phase one trade agreement this offered little sense of encouragement to investors, with US tariffs on Chinese produce remaining in place.
With markets seeing little hope that a phase two agreement is on the cards before the end of the year a general easing in risk appetite helped to shore up the US dollar.
USD exchange rates also benefitted from a surprise surge in the Philadelphia Fed business outlook index, which jumped from 2.4 to 17.0 in January.
As forecasts point towards a monthly contraction in December’s US leading index reading, however, the mood towards the US dollar could soon sour.
Fresh evidence of weakness within the world’s largest economy could drag USD exchange rates lower across the board, with global trade tensions looking set to drag on growth for some time to come.
Unless January’s manufacturing and services PMIs can deliver stronger growth on the month support for the US dollar looks set to weaken over the course of the week.
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)