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Markets await second phase of negotiations

11th December 2017 Market Update

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🇬🇧 GBP – There is no significant data from the UK today. As the transition to phase 2 in the Brexit negotiations takes place, there are a number of key bits of data being released this week. CPI, average earnings and retail sales are being released on Tuesday, Wednesday and Thursday respectively. The markets have been mainly focused on the political developments lately, and therefore these pieces of data may not have the impact we have seen historically.

🇪🇺 EUR – Like the UK there is no important data being released from the EU today. The rest of this week will follow suit, with manufacturing figures on Thursday being the only data of note from the Eurozone this week.

🇺🇸 USD – Despite a quiet start to the week, on Wednesday all focus will turn to the US as the Federal Reserve are expected to increase interest rates to 1.5%. CPI is also released from the US that day and forecast to rise to 0.4%. Previous readings have fallen short of the mark, so there could be further dollar weakness before Wednesday evening.

 

Key Announcements

No key announcements.

 

Summary: Last week the pound was buoyed as an agreement over the Irish border was made between the British government and EU. This week the formalisation of this is expected to take place and phase 2 of the Brexit negotiations officially begins. There is no data of note at the start of this week. The standout event this week is Wednesday, when the Fed is widely expected to increase US interest rates to 1.5%. The language of the statement that follows will be key. In previous years, the dollar has in fact weakened following interest rate rises.

 

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Darren Kilner

Darren Kilner

Darren is Head of Dealing at FairFX. Darren lives and breaths FX, his Mastermind topics are G8 currencies and economic forecasts.

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