020 7898 0500
Stormy Westminster
With no meaningful data from either side of the Channel, yesterday the markets focused on the likelihood of an attempt to replace the prime minister. Along with the cost of borrowing, measured by bond yields, the pound-euro rate ebbed and flowed through the day as the prime minister faced calls for his resignation from the leader of the Labour Party in Scotland. The word is that the Scottish leader expected other important party figures to follow.
When they didn’t, and indeed volubly supported Starmer, the pound recovered. No-one knows what the next move in this slow-moving political car crash will be, but bond yields and the pound seem likely to follow it. Markets don’t “price” personalities, but they do price down instability.
You can see the effect of politics on a currency in Japan, where the election of Sanae Takaichi as prime minister, armed with a fiscal stimulus plan, boosted Japanese stock markets to record highs. The yen followed.
Overnight we have had some data at last. The British Retail Consortium showed a 2.3% like-for-like growth in sales in January, as shoppers returned to shopping in force. This was far ahead of expectations.
Still to come this week, Non-Farm Payrolls (NFP) in the USA and Gross Domestic Product (GDP) in the UK on Thursday. Plus, politics…
Make sure any upcoming transactions are protected against the risks of sudden market movements. Secure a fixed exchange rate now with a forward contract; call your Business Account manager on 020 3918 7255 to get started.
GBP: A bruised pound on steadier ground
Against the US dollar, sterling has gained half a cent since yesterday. Against the euro, the pound has also recovered some composure, although it is close to 1% down on last week. Following the BRC’s good news for shopkeepers overnight, the next major data event is GDP on Thursday.
GBP/USD past year
EUR: Calm times for euro
When you can see a mixture of green and red on the board, a currency is in reactive mode, and that’s been the euro in recent days. The steadiness of the ECB’s interest rate policy is allowing the single currency to stand still while some gain on it (sterling, the yen and Swiss franc among others) and others lose – notably the US dollar. There’s not much data-wise to upset the applecart this week.
GBP/EUR past year
USD: Markets look to NFP tomorrow
We’re halfway through jobs week in the USA, with one report already showing the labour market in poor shape (‘softer’, in economics parlance) and Non-Farm Payrolls due tomorrow. Even so, these are relatively quiet times for President Trump and for the US dollar. Maybe too quiet? Retail sales is out at 1.30pm.
USD/GBP past year
For more on currencies and currency risk management strategies, please get in touch with your Smart Currency Business account manager on 020 3918 7255 or your Private Client account manager on 020 7898 0541.
