24th January 2020 Market Update
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?? GBP – There was no data of significance from the UK yesterday. Sajid Javid reassured business leaders yesterday by stating that the UK would not diverge from Europe “for the sake of it”. This allowed sterling to maintain its recent momentum, particularly against the euro. Today flash manufacturing and services PMI are being released at 9.30am. They are both expected to rise above the previous readings, and this could strengthen sterling.
?? EUR – As expected by the market, the ECB kept interest rates at 0.00% yesterday. The market however responded to Lagarde’s statement that she is going to launch a strategic review into its €200bn corporate bond holdings to take account of climate change. They are also going to debate how much central banks should do to counter climate change. The market responded to this, with the euro marginally weakening. This morning flash manufacturing and services PMIs have been released from across Europe. Figures were better than the market expected for Germany, however across the whole of Europe manufacturing exceeded expectations, whilst services fell short. In response the euro has weakened this morning against both sterling and the dollar. Lagarde is also due to speak at Davos today, where she could further elaborate on her intentions for her review this year.
?? USD – Crude oil inventories fell by more than expected yesterday, however this had a negligible impact on the US dollar. This afternoon US Treasury Secretary Mnuchin is also due to speak at Davos, and no doubt he will be in the spotlight. This afternoon manufacturing PMI and services PMI is also being released from the US. Manufacturing PMI is due to arrive inline with the previous reading, whilst services is due to creep up.
GBP: Sterling remains firm prior to today’s manufacturing and services PMIs
EUR: The Euro weakens as Lagarde kicks off first strategic review since 2003
USD: Manufacturing and services PMIs due to be released this afternoon
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