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Sterling sidesteps bodged reshuffle

Sterling sidesteps bodged reshuffle

GBP
The GBPUSD pair has now been range-bound for the last three trading days despite some pretty important data. The virtually empty economic docket did little to influence the pair’s momentum yesterday, with the latest UK political development – a reshuffle in PM May’s cabinet – extending some support to the British Pound. With two senior MPs refusing to accept the roles allocated to them, underlying concerns over May’s credibility and her ability to tackle the ongoing Brexit negotiations are called into question.

The latest data from the British Retail Consortium (BRC), which represents large chains, showed rising consumers prices lead the UK shoppers to cut back on almost everything other than food in the last three months of 2017, resulting in the biggest fall in non-grocery spending since 2009. The BRC said overall spending in the last three months of 2017 rose by a sluggish 1.1%, compared with an average annual growth rate of 1.7% for 2017 as a whole.

USD

There was limited activity in the US market yesterday but the Dollar was able to regain ground due to investors short covering their investments. Cable reached lows of 1.3526 whilst against the Euro, levels as low as 1.1940 were seen.

Consumer Credit Change surprised to the upside as consumers borrowed $27.95bn for November, which was revised up from $19.75bn, and the largest increase for 20 months. Aside from the economic data, FOMC members Bostic and Williams spoke yesterday whereby Atlanta President Bostic was cautious over the US Dollar 2018 outlook, stating that due to low inflation, the current expectations of three rate hikes this year may not be necessary. San Francisco Fed President Williams, on the other hand, stated that he expects the US economy to remain strong. 

EUR

Eurozone Sentix investor confidence beat expectations by strengthening to 32.9 in January from 31.1 the previous month. Retail sales rebounded 1.5% for November following October’s 1.1% decline, although there was little market impact as markets looked to assess wider economic and political developments.

German bund yields declined during the day which eroded some of the Euro support. The Euro’s retreat through the 1.2000 level against the Dollar also eroded confidence and triggered a stronger round of profit-taking.

Data To Watch:
00:01 GBP BRC Like-For-Like Retail Sales (YoY) (Dec)
07:00 EUR Exports (MoM) (Nov)
07:00 EUR Trade Balance s.a. (Nov)
08:00 EUR Non-monetary policy’s ECB meeting
n/a EUR Unemployment (Nov)
10:00 EUR Unemployment Rate (Nov)
15:00 USD FOMC Member Kashkari Speech

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