Tough talking Britain

GBP

Sterling stays mildly negative around the 1.2970 figure against the Dollar and 1.1975 against the Euro as we begin Tuesday’s trading session. The Pound has dropped after the UK’s Brexit negotiator David Frost propelled the odds of fierce trade negotiations with the EU with formal talks due to start soon. 

Markets are now awaiting key employment data from the UK for a fresh impulse and traders will be keeping their eyes on the January month Claimant Count Change and three-month to December Unemployment rate, coupled with the Average Earning figures. Considering the recently upbeat activity numbers from the UK, further fundamental strength could quite easily push Mark Carney and the Bank of England to leave its bearish bias.

USD

The USD has stayed high supported by headlines surrounding the Chinese COVID-19 virus. Despite efforts by the Chinese government to contain the fast-spreading coronavirus, market participants appear somewhat sceptical, and that transpired into a still steady demand for the safe-haven universe.

The dollar has been supported today as well after the People’s Bank of China pumped more stimulus into the domestic economy in order to cushion the negative impact of the coronavirus on the economy. 

Today we see the regional manufacturing gauge measured by the NY Empire State index is due on Tuesday along with the NAHB index and TIC Flows.

EUR

Despite the Euro’s latest recovery attempt from 34-month lows of 1.0825, the sentiment around the common currency continues to be undermined by the German economic growth concerns and broad-based Dollar strength. The shared currency continues to remain weighed down by mounting fears of a recession in Germany alongside their central bank, Bundesbank, reporting yesterday, that economic growth will likely remain weak in the first quarter of 2020. Fueling further bearish sentiment around the Euro

On the docket today, ZEW Economic Sentiment is expected to worsen to 21.5 in February vs. 26.7 reported. 

Data to watch 

09:30 – GBP – Average Earnings Index

10:00 – EUR – German ZEW Economic Sentiment