Sterling gained support from positivity surrounding Brexit talks after speculation increased that the UK government would increase its settlement offer. Sterling was also gaining support from a relative lack of confidence in other major currencies with the Euro and Dollar both hindered by political uncertainties.
Bank of England (BoE) Deputy Governor Sir Dave Ramsden stated that he had a somewhat different assessment of the UK economy compared with the Monetary Policy Committee (MPC) judgement and that a more flexible labour market could mean that there is greater scope for the economy to grow without generating inflation. Sir Ramsden was also concerned about damage to investment from uncertainty as he maintained a dovish tone, although Sterling only retreated marginally following the remarks.
Sterling advanced to the highest level for over two weeks against the Dollar with a test of resistance above 1.3250 while GBPEUR tested the 1.1299 support level.
There were no US data releases yesterday and activity levels were low ahead of Thanksgiving (on Thursday), especially with Congress in recess which stifled tax-reform talk.
Fed Chair Janet Yellen announced that she would also resign as Fed Governor next year once she is replaced as Chair by Jerome Powell. As US bonds yields moved higher, the Dollar index gained support and moved to one-week highs with a test of the 94.0 level. The Euro gradually lost ground with a fresh retreat to below 1.1750 while the Dollar held steady on Tuesday.
Amid a lack of notable economic data releases yesterday, the political German turmoil remained the centre of attention. German President Steinmeier urged parties to reconsider the possibility of another voting process as Chancellor Merkel was unable to form a minority government and was sceptical over the possibility.
Further, European Central Bank (ECB) President Draghi’s speech yesterday highlighted that inflation has yet to show a positive, self-sustaining upward trend. Draghi further stated that inflation pressures are still hampered by a labour market slack and ECB measures will support current financing conditions to ensure what is still a necessary mild monetary stimulus. Speeches from other ECB members also suggest that 2018 will provide no major changes, but smaller adjustments which gave the Euro a more dovish outlook for traders.
Data To Watch:
09:00 EUR EU Financial Stability Review
09:30 GBP Public Sector Net Borrowing (Oct)
10:00 GBP Inflation Report Hearings
15:00 EUR ECB Cœuré Speech
23:00 USD Fed's Yellen Speech
Posted in Daily Market News on Nov 21 2017
About the author //
With more than 17 years experience in financial services, Head of Sales Rob guides PLCs and sole traders alike through the complex maze that is the foreign exchange market, helping them to save money and mitigate risk.
He has a wealth of experience and knowledge from holding numerous roles including various positions in investment banking and services in Front, Middle and Back offices. This gives him giving a particularly insightful view on customers’ problems and requirements. Rob also helps to keep our clients informed of the latest in the currency world with our daily market commentary.
GBP In the absence of any UK economic data, the Pound was influenced primarily by global trends and political developments. EU Council President Tusk stated that the UK had not made enough progress to move Brexit talks forward and that it needs to happen at the beginning of December in...VIEW FULL ARTICLE
Posted in Daily Market News on Nov 20 2017 by Rob Affleck