What Goes Up – Must Come Down

9th May 2019 Market Update

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🇬🇧 GBP –  Sterling’s fragility was laid bare again yesterday as the Pound’s slide from earlier in the week continued throughout the day. ITV’s Political Editor Robert Peston played market pot-stirrer in chief once again after a report that Labour was close to terminating talks with the Government today to enable the publishing of its EU Election Manifesto. With a lack of economic data, the Pound fell by 0.5% but resistance levels at least stopped the Pound going further.

Today features no economic data for the UK. As has been the recent trend, any Brexit negotiation headlines or rumours will likely have the greatest impact on the market. Theresa May has reportedly told senior Tories that a fourth attempt to push a deal through Parliament will be made before the UK goes to the polls for the European Elections on May 23rd despite the likelihood of failure unless Labour’s support can be gained.

🇪🇺 EUR – The Euro gained against the Pound yesterday but remained flat against the US Dollar. Industrial Production for Germany published far healthier results, but Europe’s largest economy will need other metrics to follow suit before concerns wain about the chances of a recession. A speech by Mario Draghi did not contain any further forward guidance. The Euro moved to its highest level against the Swedish Krona in nearly a decade after the Swedish Central Bank confirmed a cautious approach to further interest rate rises.

Today features a complete lack of data for the Eurozone meaning that the Euro will be at the mercy of external factors for its movements.

🇺🇸 USD –  The US Dollar traded very closely against most of its majors yesterday, except for the Pound, as markets waited for further news about the US/China trade war. China threatened to take counter measures against the US which led traders to avoid making big moves in the Dollar as they have done previously when tensions have increased. The Japanese Yen was the big winner as a result.

Today features mid-level data in Producer Price Index and Continuing and Initial Jobless claims data being released at 12:30. It is unlikely that there will be significant reaction in the rates as a result but Fed Chair Jerome Powell’s speech at the same time could cause some volatility. Bostic and Evans will speak later in the day as well. The US Dollar index remains at strong levels.
 

Summary:
GBP: Closely related currently to the prospect of a Conservative / Labour deal

EUR: Quiet week for the Euro with no data to mention

USD: Remains strong but an escalation of the trade war could affect the Greenback


 

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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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