German government

Political uncertainty benefits Euro

28th August 2018 Market Update

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?? GBP – Sterling remains in a weak position, particularly against the Euro. As long as the political uncertainty remains, this trend could be set to continue. Over the next week there is no data of significance from the UK, therefore it would not be surprising if the Pound weakened further.

?? EUR – The Euro has been the main beneficiary of the political uncertainty in the US and the UK. As a result, it has strengthened quite considerably against the Pound and Dollar. CPI is the key data from Europe this week and out on Friday. It is expected to come in at 2.1% and be in line with the previous reading.

?? USD – The Dollar weakened slightly further on Friday as core durable goods orders came out below expectations at 0.2%. However, it was able to recover slightly on Monday, as Trump was able to announce a trade deal with Mexico, this is in effect a revamped NAFTA. Preliminary GDP is being released on Wednesday. Analysts are forecasting a 4.0% reading, which shows the US economy is still growing at an exemplary rate.

 

Key Announcements

No key announcements today.

 

Summary: Like last week there is not a significant amount of data out over the next week. However, like last week this does not mean there will be a lack of market movement. Yesterday, the Turkish lira weakened further after a week-long bank holiday, as fears maintained that the Turkish central bank has been politicised and become a tool of President Erdogan. Over the past week the Euro has strengthened against Sterling as a by-product of Dollar weakness, making it its strongest levels against Sterling for the past year.
 
This week preliminary GDP is being released from the US and this is expected to show that the US maintains its relentless growth at 4%. On Friday CPI is being released from across Europe and is expected to maintain its level of 2.1%.

 

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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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