13th November 2019 Market Update
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?? GBP – Sterling initially edged lower yesterday as markets digested the latest updates from the Brexit Party. Traders concluded that the Pound had been over bought on Monday following analysis that the Brexit Party’s decision to not run in Conservative held seats would have a minimal effect. Added to this, the rejection of calls from them to stand aside in Tory target seats hurt the Pound as it still impacts the chances of a Conservative majority. However, Sterling fought back strongly in the afternoon following improved unemployment readings. The Pound finished higher against the Euro and slightly below the open versus the US Dollar.
Today sees the latest Inflation readings published for October which are expected to fall further away from the Bank of England target. This may distract the market away from the Election just long enough to create some movement and could result in the Pound dropping away from recent highs. Otherwise, politics will continue to dominate.
?? EUR – The Eurozone once again took a back seat in market movements. A couple of speeches from ECB members and the ZEW Economic Sentiment data did little to interest analysts which meant that the Euro had little support. It lost further ground against the US Dollar after a torrid few days.
Today features Industrial Productions figures being released which are due to show a mixed picture and as a result, will have a limited impact on market movements.
?? USD – Trade tensions once again dominated the fluctuations for the US Dollar yesterday. There was cautious optimism that Trump would announce a 6 month delay on implementing tariffs on European car manufacturers which helped the US Dollar more than the Euro. Demand for safe-haven currencies has also moved higher in recent days. As it transpired, Trump offered no new trade war information and aimed fury at the Fed instead but the US Dollar kept its gains.
Data could be back in focus today, however, as Inflation readings are published at 13:30. They are expected to remain flat at 1.7% which will be interpreted by markets who are pricing in the chance of another interest rate cut before Christmas. Federal Reserve Chair Jerome Powell will also be testifying from 16:00 which may provide further forward guidance.
GBP: Pound reacts to election deals and alliances
EUR: Lost ground against major peers
USD: Powell’s testimony in focus
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