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Could weak business optimism reverse pound rally?

business-articlesCould weak business optimism reverse pound rally?
  • Weaker business optimism to reverse pound gains

  • Retail sales slump could dent Canadian dollar

  • US dollar volatility forecast on Fed manufacturing index


Easing business optimism to weigh on pound

The good mood towards the pound could fade this morning if the CBI business optimism index weakens as expected.
Expectations point towards the index falling from -16 to -22 at the start of 2019, highlighting mounting business concerns over the impending Brexit deadline.
Confirmation that businesses are continuing to take a negative outlook in the face of ongoing Brexit-based uncertainty could return GBP exchange rates to a downtrend.
Without any signs of progress towards a Brexit agreement the appeal of the pound may prove limited today.

Canadian dollar exchange rates vulnerable ahead of retail sales data

After a disappointing slump in Canadian manufacturing sales CAD exchange rates look vulnerable ahead of this afternoon’s retail sales data.
Another contraction in sales would add to concerns surrounding the health of the Canadian economy, leaving the Canadian dollar exposed to fresh selling pressure.
Even if the data shows an improvement in consumer spending, though, this is unlikely to give CAD exchange rates a significant boost.
Continued weakness in the oil market may give the commodity-correlated Canadian dollar further cause for decline, meanwhile.

Fed manufacturing index to provoke US dollar volatility

The US dollar is likely to see increased volatility this afternoon with the release of the latest Richmond Fed manufacturing index.
Evidence that manufacturing sector activity picked up in January could see USD exchange rates trending sharply higher as worries over the economic outlook ease.
However, another month of underwhelming sector performance would give the Federal Reserve additional incentive to leave interest rates on hold for longer.
With the global growth outlook already easing any fresh signs of weakness within the US economy may weigh heavily on the US dollar.

Upcoming Data:

Wednesday, 23rd January 2019
11:00 GBP CBI Business Optimism Index
13:30 CAD Retail Sales
15:00 USD Richmond Fed Manufacturing Index

Philip McHugh

Philip McHugh

Joining the corporate trading desk in 2007, Phil now over sees all of Currencies Direct’s corporate dealing activity. Having gained experience working with hundreds of businesses to optimise international payments processes and execute comprehensive risk management strategies, Phil currently works with a portfolio of corporate clients whilst managing Currencies Direct’s overall market exposure

Phil has FCA approval and has completed the Certificate in International Treasury Management (CertiTM)

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