Pound climbs to 31 month high versus the Euro

9th December 2019 Market Update

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?? GBP -  Sterling continued its impressive run on Friday making new highs across the board as the polls continue to put the Tories ahead. Sterling versus the euro is now at a new 2 ½ year high.

The pound has even continued to rise this morning as we head into the final week of the UK general election after the closely watched MRP poll on Sunday gave the Tories a majority of 38. However there still remains a major short term risk for clients as to whether the polls have actually got it correct and clients need to keep in mind what happened in the 2017 elections where polls got it wrong and we were faced with a hung parliament.

On the data front we have growth figures out on Tuesday forecasted to show growth of 0.1%, up from -0.1% in September.

?? EUR - The euro closed last week on the back foot as economic data continued to disappoint. The euro also suffered due to increased flows into the US dollar following impressive job figures.

This week, the key news will ECB president Christine Lagarde first monetary policy meeting on Thursday. The bank is expected to keep interest rates as they are and is also expected to keep the current pace of monetary easing in place.

?? USD -  Fridays job figures gave the greenback support with the nonfarm payroll print showing an impressive 266,000 being added in November, wage growth coming in at 3.1% and the unemployment rate dropping to 3.5%.

On the data front this week, we have inflation figures out on Wednesday afternoon, forecasted to show an increase from 1.8% to 2%. In the evening we have the Feds latest interest rate decision, forecasted to remain at 1.75% and accompanying monetary policy statement where there isn’t any expectation for any significant change

 

Summary:

GBP: Polls still put the Tories ahead
EUR: ECB Rate decision in focus
USD: Fed interest rate decision on Wednesday

 

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