27th September 2017 Market Update
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?? GBP – GBP has continued its consolidation from last week, trading relatively flat against much of its main trading partners. Threats remain to the pound however, Moody’s downgrading of the UK’s credit rating, its second since the Brexit vote, is a major vote of no confidence for the UK. This adding to a continuingly uncertain political landscape and indifferent data has led some observers to believe the pound, particularly against the dollar, trades at generous levels.
?? EUR – Having been on its best run for many years since March, the euro has recently been running out of steam. The dollar may be in line to re-trace some of its 13% of losses against the euro since the turn of the year as sentiment turns for the greenback.
?? USD – A confirmation of a final unwinding of the historic QE programme, further interest rate increases and an improvement of data has seen the dollar’s prospects improve having been heavily sold off all year. GBP/USD is heading towards one of its highest levels since the Brexit vote according to the FT, this is a reflection of the pound’s value against an improving dollar. Durable goods orders this afternoon is expected to have a decent showing which could provide some dollar support.
13:30pm – Durable Goods
15:30pm – Crude Oil Inventories
21:00pm – Interest Rate Decision
Our View: With the dollar attempting to wrestle the upper hand in the currency markets, both Sterling and euro will be at risk to the rising dollar. The pound however could gain against the euro in light of this, outflows from the single currency into the dollar could see the euro weaken across the board.
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