Brexit Chatter and Economic Data Put the Pound in the Spotlight

Economic data out of the UK and Brexit chatter keeps the Pound in focus. Across the pond, expect chatter from Capitol Hill to also influence in the day.
Bob Mason
UK Sterling
Bank of England text on a UK Fifty pounds note

Earlier in the Day:

There were no material stats released through the Asian session this morning.

Following Central Bank downward revisions to growth forecasts last week, China’s return from a week off was watched closely as Trade talks with the U.S remain the main area of focus for the markets.

Initial progress in trade talks and a willingness by China to make early concessions has provided some early support as trade talks resume this week. Trump’s comments last week, which plagued the markets, will likely see the markets look to the U.S to delay the planned roll-out of fresh tariffs, scheduled for 1st March.

At the time of writing, the Japanese Yen was down by 0.22% to ¥109.97 against the U.S Dollar. With the Japanese markets closed today, a bounce in the Hang Seng and the CSI300 in the early part of the day weighed on the safe havens.

The Aussie Dollar was up by 0.03% to $0.07090, while the Kiwi Dollar was up by 0.28% to $0.6759. The pair may have found support at the start of the week, but with the RBNZ policy decision due out on Wednesday and lingering concerns over global growth keeping the bulls at bay, it’s likely to be a choppy week ahead.

In the equity markets,

The CSI300 was up by 1.37%, with the Hang Seng up by 0.23%. Hitting reverse was the ASX200, which ended the day down by 0.18%, a partial recovery late in the day limiting the day’s losses.

The Day Ahead:

For the EUR

There are no material stats scheduled for release in what’s a particularly quiet first half of the week on the data front. The markets will need to wait for Eurozone industrial production figures due out on Wednesday, which is not expected to be too EUR friendly.

Outside the numbers, expect market sentiment towards this week’s U.S – China trade talks and risk appetite in general to provide direction.

At the time of writing, the EUR down 0.03% at $1.1320, with $1.12 levels continuing to be the near-term target.

For the Pound

It’s a big day on the economic data front. Key stats through the day include 4th quarter GDP numbers, December’s industrial and manufacturing production figures, and December trade data. We will expect the focus to be on the manufacturing production and GDP numbers.

Following BoE Governor’s comments on monetary policy and warning to the markets on the policy front last week, positive data would give the Pound a much-needed boost.

While the numbers will have an influence, Brexit chatter from parliament will remain the key driver. The possibility of support from the Labour Party is good news for the British PM, though the markets will be looking for a plausible deal rather than just a willingness for both sides to explore alternative options.

At the time of writing, the Pound was down 0.08% at $1.2933.

Across the Pond

There are no material stats scheduled for release. For the Greenback and risk sentiment in general, the markets will be looking toward both Capitol Hill and the Oval Office.

While trade war chatter will certainly be a key driver, the threat of yet another partial government shutdown returns, with temporary funding expiring on Friday.

At the time of writing, the Dollar Spot Index was up by 0.07% to 96.705.

For the Loonie

Economic data is limited to December’s trade data. We can expect the Loonie to be particularly sensitive to today’s trade figures. Any weakness in the numbers and the Loonie could be facing the prospects of C$1.34 levels against the U.S Dollar.

The Loonie was down by 0.11% to C$1.3293, against the U.S Dollar, at the time of writing.

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