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Sterling Directionless After Bank Holiday

29th May 2019 Market Update

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🇬🇧 GBP –  The economic calendar was empty for the UK yesterday continuing the quiet start to the week after the bank holiday. The Pound had been treated kindly by the lack of volume going through the market on Monday but the sideways movement initially appeared to end with a boost to the Pound on Tuesday morning. This was short lived, however, and what followed was a day of choppy trading as markets digested the results of the EU Elections.
The markets will continue to search for direction today with another day lacking in data releases. The battle to succeed Theresa May as Prime Minister and Conservative Party leader will probably be used by traders to determine the likelihood of a no deal Brexit which has previously had a direct impact on the Pound.

🇪🇺 EUR – The Euro suffered slightly at the hands of the US Dollar yesterday but those on the continent will be relieved that the pro-Europe parties were able to cling to power in the EU Elections. With only a mix of low level data being released from the Eurozone, the single currency was held down by the ongoing Italian debt concerns.
Today features only a handful of speeches from the ECB’s Mersch and German Bundesbank President Weidmann. It will be interesting to see if they refer to the EU Elections results and the consequences on Monetary Policy for the Eurozone but otherwise it looks like another unremarkable day for the Euro.

🇺🇸 USD –  The Dollar index held its previous levels yesterday backed by a combination of impressive consumer confidence figures as well as the continuing trade war with China helping the popularity of the Dollar as a safe haven. Trump again signalled that the US and China were still a long way from a trade deal. Meanwhile, Consumer Confidence figures beat forecasts and rose to the highest level since November last year, supporting the Dollar.
Markets have been unmoved this morning with the news that no major US trading partner was considered to have breached the ‘currency manipulator’ threshold but that countries such as China, Germany and Italy require close attention. Diplomatically, this may prove contentious given Trump’s propensity to spark volatility from his tweets. Economic data is again thin on the ground for the US today with only the Redbook index being released which typically has very minimal impact.

 

Summary:

GBP: Sterling topsy turvy after a big weekend of politics
EUR: Relatively unaffected by anti-EU election risk
USD: Continues to benefit from economic and political uncertainty


 

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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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