Troubles for the UK and Germany

12 January, 2018

Paul Newfield

Yesterday saw some movement in the markets with GBP-EUR losing around half a cent throughout the days trading and GBP-USD actually gaining a half-cent in the afternoon. This was caused largely by above expectation figures from Europe including retail sales and industrial production. Negative PPI inflation and initial jobless claims from the US was the source of the slump in USD, although the figure for continuing jobless claims was below expectation and a positive for the US labor market.

Amid continuing talks in Germany to find a solution to its coalition problem, with Angela Merkel negotiating with the Social Democrats mainly on the subjects of tax and migration, there are plenty of other data releases that could cause further GBP-EUR weakness. The pound is fragile to say the least and even positive data from the UK doesn’t seem to improve its state. Whilst there is no UK data and very little in the way of expected figures from Europe, the US takes centre stage today. Any significant, under expectation announcements could cause a strengthening of the Euro, leading to higher prices when converting your pounds.

This morning there will be CPI inflation from France and Spain and at 13:30 we have retail sales and CPI inflation from across the pond, with the latest oil rig count at 6pm and a speech being given later tonight by Federal Reserve bank of Boston, Eric Rosengren.