Sterling breaks 1.4000
January 24th: Highlights
- Sterling makes another post-Brexit high
- Stronger than expected Consumer Confidence pushes Euro through resistance
- Dollar weakness contributing to Euro and Sterling gains
Sterling achieves medium term target
Sterling also rallied versus the single currency yesterday making a fresh high for 2018 of 1.1413 before falling back a little to close at 1.13,69 although it has resumed the rally overnight again clawing its was above 1.1400.
Today sees the release of the employment report in the UK. With the labour market already tight, the risk is for a surprise fall in the number of new jobs created. The markets focus will be on the hourly earnings data that should show a marginal narrowing of the gap between incomes and prices following last week’s fall in inflation.
Market focus turns on Frankfurt.
The sense of anticipation around the Euro was heightened yesterday following the release of Eurozone-wide consumer confidence data that virtually confirmed that fears over the financial crisis have now passed.
The current rally in anticipation of an announcement by the ECB could be tempered should Sr. Draghi voice concerns over the currency strength of the currency. The dampening effect of a stronger currency on inflation is counterbalanced by its effect on the ability of the weaker countries to export goods and services.
Dollar weakens further.
Powell is known to favour low interest rates but also subscribes to a normalization of monetary policy sooner rather than later
The dollar index has continued its recent fall making a fresh multi-year low of 89.82.
Manufacturing and services sentiment indexes are released later today, and they are expected to continue the recent positive outlook. Friday sees the release of the first cut of preliminary Q4 GDP with headline growth expected to have fallen back a little to 3% following the final Q3 number of 3.2%.
The current dollar weakness has coincided with positive sentiment for other G7 economies which has exacerbated the dollar’s fall. This has magnified price action in the FX market considerably.
Have a great day!
About Alan Hill
Alan has been involved in the FX market for more than 25 years and brings a wealth of experience to his content. His knowledge has been gained while trading through some of the most volatile periods of recent history. His commentary relies on an understanding of past events and how they will affect future market performance.”