City of London

Pound rocked by uncertainty again

4th February 2020 Market Update

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🇬🇧 GBP – The pound declined yesterday after EU chief Brexit negotiator, Michel Barnier, and UK prime minister, Boris Johnson, outlined two very different and near opposite stances ahead of negotiations on a future trade relationship.

From the markets perspective it now appears that unless there are concessions made on both sides, it is not looking like we will see some form of comprehensive trade deal being struck in the coming months.

For the pound, this potentially spells more trouble ahead as well as uncertainty once again rears its ugly head, and this is the primary reason for the pounds decline yesterday and going into the early hours of today.

The market even ignored the better than expected manufacturing PMI’s figures for January which rose to 50. This morning we have January’s construction PMI’s expected to rise also.

🇪🇺 EUR – The euro managed to garner some support yesterday following better than expected manufacturing PMI figures from Italy, France, Germany and the Eurozone as a collective. However, bar France, the manufacturing sector for those nations remains in contraction.

Today, we only have Italian inflation figures due out.

🇺🇸 USD – The dollar drew demand yesterday as ISM manufacturing PMI’s for January jumped to 50.9 versus an expected 48.5. New orders in the sector improved to best levels since May 2019 with the other contributing factor being the Phase One trade deal.

No data out today.

 

Summary:

GBP: Pound drops as UK-EU trade on the rocks already
EUR: Manufacturing PMI’s pick up
USD: Phase One deal contributes to improving Manufacturing

 

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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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