17th December 2019 Market Update
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🇬🇧 GBP – Sterling has dropped nearly 2 cents against the euro and dollar overnight. The reason for this is because Boris Johnson is looking to pass his Brexit Bill this week. However, he is adding in an additional clause, which makes it illegal for the government to extend Brexit beyond the end of next year. As the government will only have until the end of 2020 to negotiate a free trade agreement with Brussels, this has increased the likelihood of a no-deal Brexit. With regards to data yesterday, manufacturing and services PMIs were both released below the market expectations yesterday, although this had minimal impact on sterling. Average earnings are expected to drop from 3.6% to 3.4% this morning, although this remains significantly above the 2% target.
🇪🇺 EUR – Services and manufacturing data were released from across Europe yesterday. The manufacturing PMI was below market expectations at 45.9, whilst services PMI exceeded expectations with a reading of 52.4. The German manufacturing PMI will be of great concern, as it came out very low and below market expectations at 43.4 (anything below 50 is negative).The only data of note from Europe today is the trade balance, which is expected by the market to increase from the previous reading of 18.3B.
🇺🇸 USD – Flash manufacturing and services PMI were also released from the US. They were both roughly in line with market expectations at 52.5 and 52.2. The dollar didn’t really move, despite both the readings being positive – unlike the UK and Europe. Today there is no data of significance from the US.
GBP: Sterling drops as Johnson looks to add clause stopping the extension of Brexit beyond 2020
EUR: Euro remains firm despite poor manufacturing PMI from Germany
USD: Positive services and manufacturing PMIs support US dollar
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