29th May 2018 Market Update
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?? GBP – With very little data to move the pound, the currency’s moves were subject to moves on other currencies.
The only significant news out this week will be Friday’s manufacturing figures but otherwise Brexit headlines should keep the lid on any potential Sterling strength.
?? EUR – Political turmoil from both Spain and Italy have pushed the euro lower with EUR/USD now at a 6-month low and GBP/EUR now at a week high.
Italian President Sergio Mattarella refused to accept the proposed anti-euro candidate for finance minister, prompting the anti-establishment Five Star Movement and Lega party to give up forming an administration. Carlo Cottarelli, a former IMF official, has been appointed interim prime minister.
Over in Spain, the government faced a no confidence vote after a Spanish corruption case involving members of the government.
Eurozone uncertainty looks set to be a key mover in the currency markets this week depending on developments from both Italy and Spain.
?? USD – Safe haven flows continued to support the US dollar with the dollar index now at a 6-month high. Notably we are now seeing the worst rates for clients to convert from pounds to US dollars for 6 months.
The big news for this week will be Friday’s all-important jobs data. Nonfarm payrolls are forecasted to increase as well as wage growth which could well give investors more reason to flock to the dollar.
No key announcements today.
Summary: Markets have awoken to news of Eurozone political uncertainty from both Spain and Italy pushing the euro to a new 6 month low against the US dollar.
Sterling saw little action due to the bank holiday weekend and the US dollar continued to strengthen on the back of safe haven flow.
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