Pound edges up against Dollar

GBP

Sterling benefited from a robust global risk appetite and there were no domestic developments and hopes that global trade dynamics would normalise also contributed. The Futures market pricing revealed slightly less confidence in a Bank of England interest rate cut this month. 

The Pound edged up against the Dollar yesterday, reaching the 1.3070 mark while the Euro slipped to the 1.1730 area. Today’s UK retail sales data is forecast to show a small net gain but more significantly, labour-market surveys and flash January business confidence data will be released next week. Sterling has made up a little more ground this morning as the global risk environment remains firm.

 

 

USD

US retail sales increased 0.3% for December, in line with consensus forecasts while underlying sales beat expectations with a 0.7% gain. Jobless claims declined to 204,000 in the latest week from 214,000 previously and below consensus forecasts. The January Philadelphia Fed manufacturing index strengthened to an 8 month high of 17.0 from 2.4 previously and well above market expectations of 4.0. New orders increased at a faster pace, although unfilled orders declined. Employment metrics remained robust while prices increased at a slightly stronger pace and companies remained optimistic over the outlook. Initial market reaction was again limited, although the Dollar decline was halted and the US currency gradually regained ground with the data seen as a net positive.

Fed Governor Bowman stated that current interest rates are likely to be appropriate this year, reinforcing expectations that rates would stay at low levels and the NAHB housing index edged only marginally lower to 75 from the 20-year high of 76 last month. 

 

 

EUR

ECB minutes from December’s meeting stated there were some indications of higher core inflation with solid upward movement in the rate excluding holiday prices. According to the bank, growth dynamics were also stabilising. The commentary dampened expectations of an even more dovish monetary policy than expected which pushed the Euro to highs around 1.1170. 

On the docket for Euroland today includes Current Account, CPi and Core CPI figures with the Euro currently trading at the 1.1133 figure.  

 

 

Data to watch

09:30 GBP – Retail Sales

13:30 USD – Building Permits

14:00 USD – FOMC Member Harker Speaks 

15:00 USD – Prelim UoM Consumer Sentiment