2nd January 2018 Market Update
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?? GBP – There was no key news or data to influence the pound last week.
This week however, key drivers for the pound will be the release of manufacturing, construction and service PMI’s from data agency Markit.
?? EUR – The euro was the standout performer last week riding on the back of flows out of the US dollar.
Manufacturing and service PMI’s will also be in focus for the Eurozone as well as inflation figures for the month of December.
?? USD – The US dollar lost ground throughout the course of last week with the US dollar index finishing at its lowest level since September 2017.
The dollar will be hoping for support from economic data this week with focus on the all-important job print on Friday. We also have the FOMC minutes as well as manufacturing figures during the course of the week.
09:00am: Markit manufacturing – Forecast to remain at 60.6
09:30am: Markit manufacturing – Forecast to drop to 58
14:30pm: Markit manufacturing – Forecast to rise to 54.5
14:45pm: Markit manufacturing – Forecast to rise to 56.1
Summary: In what was a pretty eventful 2017 for the UK economy, the pound actually managed to hold its own and broadly finished higher against its major pairs, with the Sterling index finishing 1.25% higher on the year.
Top three gains were against Turkish lira (20.9%), New Zealand dollar (11.4%), Hong Kong dollar (10.4%) and US dollar (9.6%). The currencies biggest losses were against the Czech koruna (7.6%), Polish zloty (7%) and euro (2.4%).
Sterling key factors this year look likely to be developments with Brexit negotiations, stability of the UK government, as well as wage growth and consumer spending – which is not too dissimilar to recent factors affecting the pound.
Clients should also be aware of external factors such as the potential of any further rate rises in the US, developments within the Trump administration, as well as the possibility of a reduction of monetary stimulus by the ECB.
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