Sterling at highest level since May 2017 against the Euro

5th December 2019 Market Update

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?? GBP -  Throughout yesterday and into this morning the pound rallied against all its major currency pairs by over 1%. The standout and notable performing pairs included GBP/EUR, rallying to over a 2 and a half year high, GBP/USD and GBP/JPY, achieving a 7-month high, and GBP/CNY, at its highest level since the June 2016 EU referendum result.

The continued theme over the last couple of weeks is sterling investors appear to be gaining confidence following various opinion polls suggesting the Tories will gain a majority in the General Election.

Yesterday morning UK Markit services PMI for November was released at 49.3, above the forecasted figure of 48.6.

?? EUR - Yesterday morning EU Markit services PMI for November was released at 51.9, above the forecasted figure of 51.5. Markit PMI for Composite was released at 50.6 above the forecasted figure of 50.3.

This morning German factory orders monthly figure was released at -0.4%, comfortably beneath the expected figure of 0.3%, and the annual figure was released at -5.5%, better than the -6.1% figure.

At 10am today there is various EU data. This includes GDP for Q3; the annual figure is expected at 1.2%, the same as the last reading, the quarterly figure is expected at 0.2%, the same as the last reading. The annual retail sales figure for October is expected at 2.2%, down from last month’s reading of 3.1%.

?? USD -  US - China trade talks may be delayed until US election next year according to Donald Trump. China’s foreign minister said US will pay the price for Xinjang and Hong Kong bills and any trade agreement needs to be based on “equality and mutual respect”.

Yesterday the US dollar index dropped to a 4-week low following the ADP report. The report showed employment in the US private sector created 67k jobs during November down from the 140k expected and beneath October’s 121k. EUR/USD dropped to its weekly low in the afternoon.

Other US data included US Markit services PMI for November released at 51.6, in line with expectations, US Markit Composite PMI for November released at 52, slightly above the 51.9 forecast, and US ISM non-Manufacturing PMI for November dropping to 53.9, beneath the 54.5 expected figure.

Today at 1.30pm US Trade balance for October is revealed and at 3pm US factory orders for October figure is revealed. Fed member, Randal Quarles, is speaking at 3pm.

Summary:

GBP: Pound benefits on optimism of Tory majority
EUR: Service sector expands larger than expected
USD: ADP job figures disappoint weakening the dollar

 

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