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Sterling grows with expectation

Sterling grows with expectation

 

GBP

The weekend’s election polls put a bit of pep in Sterling’s step yesterday morning, gaining on it’s peers. An increasing lead for the Conservative’s fed expectations of a majority government and Brexit deal approval. The Pound pushed above 1.2980 against the Dollar and near 1.1735 against the Euro before correcting to just below 1.1600. With the Dollar’s psychological 1.3000 threshold holding firm, there was some profit taking. Boris Johnson’s climbdown over a cut in corporate taxes also reduced Sterling support and there were some doubts over a trade deal.

The Pound held steady this morning, above 1.2950 on the Dollar ahead of the first TV debate between Boris Johnson and Jeremy Corbyn this evening. The only thing the forecasters agree on is that the Pound won’t be trading at the same levels when the election outcome is known.

 

USD

EUR/USD started the week above 1.1050 with trade woes between the US and China coupled with mixed US data weighing on the dollar. The market will be monitoring news from the White House regarding any progress on a trade deal between the US and China. 

The US NAHB housing index was little changed at 70 for November from 71 previously. Cleveland Federal Reserve (Fed) President Mester stated that underlying inflation looks to be rising to the 2% target and that the Fed is on hold to watch how the economy evolves. Although she would have preferred not to cut rates in October, she was sympathetic to the view that a cut made sense. President Trump, Treasury Secretary Mnuchin and Fed Chair Powell met on Monday with Trump continuing to push for lower interest rates. There was little impact on interest rate expectations with futures markets indicating just over a 20% chance of a cut in January 2020. There were dollar reservations and it was unable to gain any traction. 

 

  

EUR

The recovery in the Euro appears to have met some resistance against the Dollar at the 1.1080 region yesterday. The positive push in the common currency is struggling to overcome, what seems to be a key area on the back of some pick up in the demand for the Dollar.

Investors continue to look to the US-China trade front for near term direction, although sentiment around the issue has soured as of late in response to the lack of progress in the deal, even more so after President Trump stated he would not favour the rollover of some tariffs.

Data wise in the Eurozone, all attention will focus on Thursday’s publication of the ECB minutes, the speech of new ECB President Lagarde and the first estimates of November’s PMIs.

 

 

Data to watch

13:30 – USD – Building Permits

14:00 – USD – FOMC Member Williams Speaks

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