Movement across currency markets sees continued sensitivity in Sterling

The movement across currency markets last week saw continued sensitivity in Sterling regarding all things Brexit related. For a nice difference, we actually saw some strength in Sterling following the positive comment from a UK government lawyer that any Brexit deal would likely need to be ratified by the UK Parliament – this helped ease the concerns over the possibility of a ‘hard Brexit’. We also had other contributing macroeconomic factors such as strong CPI and much better than expected unemployment claims.

This morning, we’re starting the day with some PMI data from the Eurozone at 9AM with the French and German figures coming out fairly mixed with France at lower than expected (and lower than previous) figures and Germany at higher. We’re also awaiting the UK CBI industrial trends survey at 11AM and William Dudley’s Fed Speech at 2:05PM followed by the US Manufacturing PMI data at 2:45PM. Overall, there’s potential for another positive day.

Q3 GDP to be released at end of week in US

In terms of the US market, the Q3 GDP release at the end of the week will be widely anticipated as the market looks to confirm a regain in momentum within the US economy. This is likely to add further support to the view that the Fed will hike interest rates before the year is out which, in turn may help the US Dollar stay on the front foot against both sterling and the euro.

Looking at UK markets, Q3 GDP data is also the key release. The consensus is for growth to slow to 0.3% from 0.7% in the quarter, so it should be interesting the see the final release and how Brexit has affected UK growth so far – this could potentially yield some weakness.

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