Sterling Pressure Continues

18 December, 2018

Simon Eastman

Sterling traded in a very small range across the board on Monday as markets had little data to go on, alongside the uncertainty surrounding the Brexit deal which continued to be debated.

The only data of note came from the Eurozone, which released inflation data in the form of its Consumer Price Index. The figures came out as expected or slightly lower with the YoY figure dropping to 1.9 percent, from the previous and expected reading of 2 percent. With no progress from Italy on its talks over its spending cuts, the euro by rights should have weakened but it made some slight gains again the US dollar plus ended the day trading stronger against the pound too.

The US dollar weakened slightly against sterling over the day, with the pound making half a cent at its peak, before falling back as the trading day came to a close. Markets had no US data to go on either and await the Federal Reserve meeting tomorrow evening to give some further insight into whether we will see further interest rate rises or not this year, as they hinted at halting their current rate hiking cycle in a surprise statement last month.

The pounds small and short-lived gains against the dollar were also put down to the fact Theresa May had appeared in Parliament and confirmed we would see a vote on the Brexit deal by mid-January, as she continued to come under fire for cancelling the vote last week. May once again, rejected the idea she would call a second referendum, calling it a “betrayal” of the outcome of the original vote 2 years ago.

Today is another quiet day for market data, with nothing for the UK once again. Overnight the minutes from the RBA interest rate meeting were released while this morning the German business climate figures are released and this afternoon the US release new homes and building permits data.

With little of note being released and the markets awaiting the Fed interest rate meeting tomorrow night, it’s likely the pressure on the pound will continue to weigh heavily. We have seen rates eroded consistently since the vote got cancelled and this is unlikely to change anytime soon. While trading becomes thinner during the festive period, it’s quite possible, we will see rates come down further. With this in mind, it might be prudent to speak to one of the team sooner rather than later, should you have a currency transfer to make in the coming weeks so to avoid spoiling that Christmas cheer, give one of the team a call today and discuss the options available.