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The US’s immigration controls come back to bite

1st February 2017 Market Update

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🇬🇧 GBP – Yesterday morning Sterling weakened following worse than expected consumer lending figures, and this shows how susceptible the pound currently is to dropping off, as this data is generally seen as not that significant. Following Iran’s announcement that it intends to sell its US dollar reserves, Sterling ended up stronger against the US dollar by the close of play, however weaker against the euro.

🇪🇺 EUR – From the Eurozone on Tuesday, quarterly GDP came in as expected at 0.5% which was a slight increase to last quarter’s figure. CPI figures were a lot strong than expected in Europe, with Spain significantly exceeding expectations. The inflationary pressures in the Eurozone are putting the ECB under pressure to roll back their monetary stimulus programme, so it will be interesting to see what developments happen there.

🇺🇸 USD – Yesterday afternoon, in retaliation to America’s recent changes to immigration controls Iran announced that it would be looking to sell off its US dollar reserves in the foreseeable future. Following this news being released, the US dollar weakened significantly. Consumer confidence also fell in the US yesterday, however this had minimal impact on the market.

 

Key Announcements

🇬🇧 GBP
9.30am – Manufacturing PMI

🇺🇸 USD
1.15pm – ADP Non-Farm Employment Change
3.00pm – ISM Manufacturing PMI
3.30pm – Crude Oil Inventories
7.00pm – FOMC Statement, Federal Funds Rate

 

Our View: Sterling would have been on the back foot yesterday, however Iran’s announcement allowed the pound to recover against the dollar. Investor attention is focused on Super Thursday, with a cautious tone expected from the BoE governor, which could well cause the pound to fall further by the end of the week.

 
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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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