Brexit uncertainty continues to limit pound support

Philip McHugh December 24th 2019 - 2 minute read

  • Brexit worries continue to weigh on pound
  • Unexpected growth contraction drags down Canadian dollar
  • US dollar falls out of favour after durable goods orders miss

Lingering Brexit jitters haunt pound exchange rates
The pound extended its downtrend at the start of the week, lacking the support of any fresh UK data releases.
With markets still anxious over the possibility of a 2020 cliff-edge Brexit GBP exchange rates look set to remain biased to the downside for the foreseeable future.
Until the government offers a greater degree of clarity over the likely shape of the UK’s future relationship with the EU the potential for a pound rally appears limited.
In the absence of any supportive domestic data GBP exchange rates could struggle to return to a positive trend this week.
Weak growth rate leaves Canadian dollar exposed to selling pressure
CAD exchange rates came under pressure as October’s monthly gross domestic product missed forecasts.
Investors were caught off guard as growth deteriorated -0.1% on the month, indicating that the Canadian economy started the fourth quarter on a weaker footing.
Although market risk appetite saw a general improvement in the wake of news that China will cut import tariffs on more than 850 products this failed to shore up the Canadian dollar.
Even so, if market sentiment remains positive this could help CAD exchange rates to recover some of their lost ground today.
US dollar looks for rally on stronger manufacturing activity
Support for the US dollar weakened at the start of the week thanks to a surprise contraction in November’s durable goods orders figure.
The -2% drop in orders suggests that US consumers took a less optimistic view in the fourth quarter, raising the risk of a greater loss of economic momentum.
However, the mood towards the US dollar could improve this afternoon if the latest Richmond Fed manufacturing index rebounds as forecast.
A solid uptick from -1 to 9 would encourage greater confidence in the resilience of the US manufacturing index, to the benefit of USD exchange rates.
Upcoming Data:
Tuesday, 24th December 2019
15:00 USD Richmond Fed Manufacturing Index

Written by
Philip McHugh

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