Sterling creates new highs after positive jobs report

25th January 2018 Market Update

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?? GBP - With wages climbing by 2.4%, the pound rose to its highest level since the Brexit vote and against the euro we saw the pound at a new one month high.

No data out today but markets will be eyeing up Friday’s fourth quarter GDP figures.

?? EUR - The euro enjoyed a good day as investors continued to sell out of the US dollar and buy into the single bloc currency on expectations that the ECB will begin to normalise monetary policy.

Today sees the latest ECB interest rate decision as well as the accompanying monetary policy conference - the only thing that could stop the ECB from announcing its normalising cycle today could be the rapid appreciation seen in the euro of late. However, this could be seen as just putting off the inevitable as markets continue to believe that it will happen.

?? USD - The dollar continued to weaken following comments made by Steven Mnuchin, the US Treasury secretary, at the World Economic forum that he was pleased with a weaker dollar, which diverges from traditional US currency policy that a strong dollar is in the national interests. Preliminary Markit data didn’t help the currency unfortunately with composite services and manufacturing beating expectations.

No major data out today.

 

Key Announcements

?? EUR
12:45pm: ECB Interest Rate Decision
13:30pm: ECB Monetary Policy Statement

 

Summary: Sterling surged yesterday on the back of strong jobs data and wage growth exceeding expectations, with the currency now on for its strongest month in eight years.
 
The US dollar continued its demise also with the index now at a new three-year low.

 

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