Sterling Dives after Poor GDP, Risk on Ahead of US-China Trade Deal

Daily Update - 14th January 2020

Yesterday’s Market

• Britain GDP Data and Industrial Production 

Yesterday’s explained 

Sterling declined against dollar on Monday, after data showed Britain’s economy grew at its weakest annual pace in more than seven years in November. The data covers a politically turbulent period in Britain and does not capture some private-sector surveys that suggested a recovery in sentiment after Prime Minister Boris Johnson’s election win on Dec. 12. The pound fell to $1.2988, down 0.01 percent on the day. The euro edged higher against the U.S. dollar , as euro gained ahead of the expected signing of a Phase 1 China-U.S. trade deal. Tensions between the U.S. and Iran after the U.S. killing of a top Iranian general put investors on guard against risk last week . But with no further escalation in conflict and focus shifting towards this week’s trade deal. The euro was up 0.02 percent at $1.1135. An index that tracks the dollar versus a basket of six major currencies was up 0.03 at 97.35 on Monday.

The dollar edged higher against the Japanese yen on Monday, as dollar was lifted by optimism over the planned signing this week of a U.S.-China trade deal. The U.S.-China Phase 1 agreement, due to be signed at the White House on Wednesday, marks the first step toward ending a damaging 18-month trade dispute between the world’s two largest economies.

 

Today’s Market

• USD Consumer Price Index

Today’s Focus

It’s another quiet day ahead on the economic calendar , with no material stats due out of the Eurozone to provide the EUR & the Pound with direction. The lack of stats will leave Brexit chatter to influence on the day Britain’s departure date rapidly approaches. On the monetary policy front, dovish chatter from BoE MPC members and yesterday’s disappointing stats will test the Pound.

It’s a relatively busy day on the data front, with December inflation figures due out of the U.S later today. Barring an unexpected pickup in inflationary pressures the numbers are unlikely to have a lasting impact on the Dollar. The focus in the early part of the week will remain on geopolitics as the U.S and China ready to sign the phase 1 trade agreement on Wednesday.