The pound initially opened last week’s session on stable footing as GBP investors welcomed Scotland’s lifting of its remaining coronavirus restrictions.
Sterling is struggling to extend these gains this morning however, with GBP/EUR flat at €1.1701, GBP/USD rangebound at $1.3017, and GBP/CAD muted at C$1.7002. GBP/AUD and GBP/NZD are holding steady at AU$1.8879 and NZ$1.9681 respectively.
Today’s UK’s consumer price index could drag on the pound as economists forecast inflation remained flat in December.
What’s been happening?
After striking a fresh three-week low at the start of the European session, the pound was able to mount a modest recovery on Tuesday, following some optimistic Brexit comments from Boris Johnson.
Speaking to the BBC, Johnson said he is ‘very, very, very, confident’ that the UK will reach a comprehensive trade deal with the EU by the end of 2020.
This seemed to offer Sterling some limited support, but failed to trigger a strong reaction in GBP exchange rates given scepticism Johnson will be able to deliver on his promise and prevent the UK from crashing out of the EU in December.
Meanwhile, the publication of the US consumer price index failed to inspire demand for the US dollar on Tuesday as an underwhelming monthly reading offset a bump in annualised inflation.
At the same time, the euro floundered yesterday amid the continued absence of any notable Eurozone data.
What’s coming up?
Top of the agenda today will be the publication of the UK’s consumer price index.
Today’s figures are expected to show that UK inflation held at 1.5% in December, a joint three-year low.
This is likely to see the pound come under renewed pressure this morning as it bolsters the odds that the Bank of England (BoE) could pursue a rate cut this month.
For EUR investors the focus today will be on the release of Germany’s full year GDP figures.
This may see the euro slump as economists forecast the GDP report will show a dramatic slowing of growth in 2019 as a result of US-China trade tensions and a slowing global economy.
Finally, across the pond we have the signing of the ‘phase one’ trade deal between the US and China in Washington today.
This could help strengthen the US dollar if USD investors believe the terms of the deal will help promote US growth.
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)