Limited movement on currencies ahead of the Fed interest rate decision

9 November, 2018

Simon Eastman

Sterling/euro rates traded within a small range on Thursday as both currencies came under pressure – the euro from Italy’s downgraded growth forecast from the IMF and EU and the pound, which felt the pressure as Brexit deal hopes faded, with negotiations likely to now go on into December.

With the next EU summit pencilled in for then, dealmakers will be striving to come up with something that both parties accept, as without one, we head into the New Year without a deal on the table, which will be pretty disastrous for the pound. Cabinet ministers were invited my Theresa May to study the current deal, minus the Irish border resolution. Negotiators in Brussels are currently trying to sort out the Irish border issue, which could see May head over herself to help finalise any deal, before being put to the EU Council for approval. Of course, any deal will also need to pass through Parliament, which some see as the final stumbling block, with such split opinions in Westminster.

No data of any real note yesterday ahead of the Fed interest rate meeting and policy statement in the evening. The Fed were widely expected to leave things unchanged, especially considering the recent weakness in the dollar after the Democrats took hold of the House the other day.

The Fed meeting was fairly as expected maintaining their course for a rate hike next month, giving the dollar some basis to make some small gains against sterling overnight.

Today we have plenty of data to move the markets with UK GDP this morning, alongside industrial and manufacturing production figures, plus trade balance. The ECB member Coeure makes a speech at 10am, the NIESR release their GDP estimate and then after lunch the US markets open with Fed member Quarles speaking at 13.15pm before US PPI and consumer sentiment figures.

Plenty of data to go on and many factors to be aware of concerning potential pitfalls for the pound so make sure you stay in touch with your broker here at Currency Index to stay on top of the days ups and downs.