23rd February 2017 Market Update
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?? GBP – The most significant data out from the UK yesterday was the fourth quarter growth figures for 2016, which increased by 0.7%,demonstrating that the UK economy has grown more than its previous report in the final quarter of last year. Allegedly, this was due mostly to manufacturing results surpassing expectations.
However, this was not reflected in the rates, as Sterling fell following UK business investment data, which saw investment levels drop in the fourth quarter of 2016, indicating that tougher economic terrains lie ahead. All of this, despite our overall growth achieving its fastest pace in a year.
?? EUR – Nothing important on the data front from Europe, however looming political uncertainty in France was eased, as the euro recovered from its lowest level against the dollar in 6 weeks, due to far right presidential candidate Le Pen’s chances of victory dropping. Thus relieving concerns of an anti EU position.
?? USD – With very little to report from The States in the afternoon, focus was on the FOMC minutes in the evening, which saw members discuss a longer term price target of a 2 percent annual inflation. The minutes were a bit disappointing for markets, as the US dollar weakened off, despite the view from ‘many’ that the next hike could come ‘fairly soon’.
11.00am – CBI Distributive Trades Survey: Expected to fall flat at 0%.
7.00am – German Q4 Growth Figures: Rose to 1.9%.
1.30pm – Unemployment Claims: Expected to rise to 242,000.
4.00pm – Crude Oil Inventories: set to reduce to 3.4 Million barrels from its last reading of 9.5m.
Our View: Clients had an opportunity yesterday to buy euros at the best rate for 2017, before the sudden fall off in the afternoon. Once again this exemplifies the way Sterling has tended to perform since the Brexit vote of last year. Any sharp gains seem to be short lived, particularly when we see an upward trend. It inevitably levels off to similar opening levels.
Clients looking to take of sharp gains should contact their dealer for suggestions on how they can take advantage of such moves.
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