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Sterling hits yearly lows against Dollar

Sterling hits yearly lows against Dollar

GBP
The Pound remained constrained by ongoing political concerns, with Theresa May believing that a Brexit deal is the most likely outcome, before adding that ‘no deal’ was better than a bad deal. Media coverage of preparations for a no-deal scenario continued to unsettle sentiment.

 

Sterling conceded ground against all majors and slipped as far as 1.2920 against the Dollar, levels last seen in July 2017. The Euro pushed the Pound to 1.1190 before hitting resistance.

 

Overnight the BRC Like-for-Like Retail Sales data recorded an annualized increase of 0.5% for July, down from 1.1% in June. Food sales made a significant contribution, but ultimately the figure missed consensus forecasts of 1.5%. Also, Barclaycard data indicated a 5.0% annual spending increase.

 

Sterling was listless overnight and opens this morning near 1.1205 against the Euro and 1.2950 against the Dollar. It’s fair to say that the Pound as a currency is all about politics, until we see a decision on the UK’s future.

 

USD

 

The greenback climbed yesterday against most of its counterparts due to continued trade war tension between United States and China. Overall confidence in the US growth outlook remains strong, which feeds positivity in US Dollar sentiment.

 

The Dollar index hit fresh 2-week highs as markets again tested a key technical area. The Euro weakened to lows around 1.1530 against the Dollar, ahead of the New York market open, but the Dollar was unable to capitalise and the Euro settled just above 1.1550 amid tight ranges.

 

Today sees the U.S. Redbook sales and JOLTS job openings.

 

EUR

 

The German industrial production is the big news today, and came out below consensus at 2.5% (consensus was 3%) meaning a dip in the EUR. German industrial orders also dropped 4%, adding more pressure to the German economy. Another factor will be if the Italian debt crisis has a negative effect on the 10 year bond yield differential, another potential speedbump for the EUR.

 

Prime Minister Di Maio did nothing to alleviate concerns within the Italian economy, stating that fiscal policy was not a priority for the next budget. Combine this with the previously mentioned debt crisis and Italy is starting to cause problems for the Eurozone. Having said this, Italian bonds did rally slightly yesterday before the close.

 

Aside from the economic data already covered, there is very little news in the Eurozone today to take note of.

 

Data to watch

 

04:30    AUD RBA Interest Rate Decision

05:00    JPY Leading Economic Index (Jun)

06:00    GER Industrial Production n.s.a. w.d.a. (YoY) (Jun)

06:00    GER Trade Balance s.a. (Jun)

14:00    CAD Ivey Purchasing Managers Index s.a (Jul)

14:00    CAD Ivey Purchasing Managers Index (Jul)

n/a        NZD GDT Price Index

19:00    USD Consumer Credit Change (Jun)

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