Pound creeps higher, US dollar remains pressured

Philip McHugh December 31st 2019 - 2 minute read

  • Stronger UK mortgage approvals shore up pound
  • US dollar falters on latest signs of manufacturing slowdown
  • Market optimism over US-China trade continues to boost Australian dollar

Pound remains vulnerable to renewed Brexit anxiety
An unexpected uptick in UK mortgage approvals encouraged the pound to hold onto its positive footing at the start of the week.
As households appeared to largely shrug off political anxiety in the run-up to December’s snap general election worries over the wider outlook of the UK economy eased.
In the absence of any fresh political developments worries over Brexit are likely to remain generally muted today, to the benefit of GBP exchange rates.
However, growing doubts over the UK and EU’s ability to reach an agreement within the truncated transition period could still cast a shadow over the pound once we’re past the New Year break.
Fresh signs of manufacturing decline weigh on US dollar
Confidence in the health of the US manufacturing sector received a fresh blow thanks to a surprise deterioration in December’s Dallas Fed manufacturing index.
USD exchange rates softened as the index dropped from -1.3 to -3.2, signalling continued weakness within the manufacturing sector.
Even so, the US dollar could bounce back this afternoon if the latest US consumer confidence index improves as forecast.
Hopes of finalised US-China trade agreement boost Australian dollar
An increased sense of market risk appetite helped to shore up the Australian dollar yesterday in spite of a lack of supportive domestic data.
With markets confident that the US and China will soon sign their phase one trade agreement the appeal of the risk-sensitive Australian dollar generally improved.
However, any faltering in market risk appetite could easily see AUD exchange rates returned to the back foot.
Upcoming Data:
Tuesday, 31st December 2019
15:00 USD Consumer Confidence Index

Written by
Philip McHugh

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