Markets cautious as Trump arrives in the UK
GBP Sterling failed to ignore the broad Dollar recovery while declining to 1.2940 as we start Tuesday’s trading session. The pair’s pullback could also be attributed to the recent changes in the UK’s political outlook and cautious trading ahead of President Trump’s London visit for the NATO summit.
With the new Survation polls indicating the ruling Conservatives having only a nine-point lead over the main opposition Labour Party, markets take every criticism to the UK PM seriously. The Tory leader has recently been fired off-late, either by the opposition or the media, which in turn might have lessened the scope of the Conservatives holding the British rule after December election. The latest one came after the UK PM Johnson visited the recent attack site near London and the father of the deceased urged the PM not to politicize his son’s death. On the contrary, the Labour party’s heavy offers to the voters seem to play their roles.
On the economic calendar, the final reading of November month UK Construction Purchasing Managers’ Index PMI will be watched for intermediate moves.
The outlook for the dollar remains positive with the US economy in relatively good shape, the dollar’s safe-haven appeal standing and a cautious FED.
Manufacturing data released yesterday contracted for a fourth straight month, US ISM Manufacturing came in at 48.1 versus expectations of 48.3. Due to the data, the USD fell versus its peers. Coupled with the data, President Donald Trump’s latest move to restore steel and aluminium tariffs on Brazil and Argentina added to the recent uncertainty over a potential US-China trade deal. Meanwhile, the US Secretary of Commerce Wilbur Ross told Fox News that Trump is willing to increase tariffs if there is no deal and further collaborated to the USD weakness.
The Euro jumped more than 50 points yesterday against the Dollar, printing its biggest single day rise since mid-September. Monday’s sharp rise to a 12-day high of 1.1090 has neutralized its bearish setup. The outlook could turn bullish if the pair rises above the 1.11 figure.
On the docket today, the Eurozone Producer Price Index is scheduled for release later this morning. The impact may not be so influential on the currency markets.The Euro however, may take its cues from a speech being made by ECB member Benoir Coeure scheduled later in the day.
Data to watch
17:30 – EUR –ECB Cœuré speech