UK election speculation drives GBP movement
[vc_row][vc_column][vc_column_text]The former October Brexit deadline slid by on Thursday with the UK still a member state of the European Union thanks to a three-month extension granted by EU leaders.
Despite Prime Minister Boris Johnson’s mantra that the UK would leave the European Union, do-or-die, on October 31, the deadline came and went without incident, offering the pound renewed support against its rivals even in the face of an impending general election.
Demand for the euro faltered, meanwhile, as weakening Eurozone business confidence and an easing consumer price index stoked concerns for the health of the European economy.
While a US non-farm payrolls report for October surprised to the upside it failed to offset an uptick in the accompanying unemployment rate, limiting support for the US dollar ahead of the weekend.
An underwhelming performance from the Chinese manufacturing sector put a correlated dampener on the Australian and New Zealand dollars, with investors harbouring doubts that a US-China trade resolution can be achieved.[/vc_column_text][/vc_column][/vc_row][vc_row][vc_column][vc_column_text]
Easing Eurozone inflation fuels odds on further ECB dovishness
The European Central Bank (ECB) looks set to maintain a dovish bias in the months ahead following October’s Eurozone consumer price index, which fell further from the 2% target.
The mood towards the euro naturally soured last week as inflationary pressure across the Eurozone showed little signs of improvement, despite the ECB’s loose monetary policy.
A persistently negative Eurozone business confidence index also limited the appeal of the single currency, suggesting economic momentum is unlikely to rebound any time soon.
As global trade tensions continue to drag on the German economy, and the wider Eurozone by extension, EUR exchange rates are unlikely to find much upside.
Worries over the health of the Eurozone’s powerhouse economy may increase in the days ahead if the latest German industrial production and factory orders figures fail to impress.
Another month of deterioration in the manufacturing sector would raise the odds of a third quarter German recession, dragging the euro lower across the board.
Unless Friday’s German trade balance figure shows a widening of the trade surplus, the single currency looks set to remain biased to the downside.[/vc_column_text][/vc_column][/vc_row][vc_row][vc_column][vc_column_text]
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* Information courtesy of Currencies Direct, Philip McHugh
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)
The contents of this report are for information purposes only. It is not intended as a recommendation to trade or a solicitation for funds. Currencies Direct cannot be held responsible for any loss or damages arising from any action taken following consideration of this information. This article was written by Currencies Direct.
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