Sterling strengthened and then weakened yesterday against most currencies, but has started today on a sharp downturn.
It’s been a quiet start of the week for data in the UK, but plenty of central bankers have been talking about the economy, including ECB President Christine Lagarde yesterday and this morning.
In politics, two events with the power to weaken the pound have arisen in the past 24 hours. The British foreign secretary Liz Truss outlined a Bill to bypass the current Northern Ireland protocols. Former Prime Minister Theresa May said the move would be illegal, ineffective and would damage the UK’s standing in the world. She also suggested that European leaders see Boris Johnson as a lame duck.
In Scotland, First Minister Nicola Sturgeon has outlined a plan for a new independence referendum.
On the data front, there is some lower level data from the UK on housing, car sales and final readings for GDP and PMI, but the bigger stories will be coming from the euro side and from central banker speeches.
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GBP: Pound slips as political woes increase
The pound has slipped sharply this morning against the euro and a little less against USD, following a choppy day yesterday.
Part of the reason is the currency markets reacting to the increased likelihood of a trade war with Europe over the Northern Ireland protocols.
Later today there will a speech from a member of the Bank of England’s monetary policy committee, and tomorrow BoE governor Andrew Bailey will be in the hotseat.
GBP/USD past year
EUR: Euro on upswing in busy week for data
The euro has strengthened this morning and over the course of the week against the pound, US dollar and other major currencies. However, rates are on a hair trigger and likely to reverse direction at any moment.
It’s been a busy week for data and central bank speeches. French inflation came in roughly as expected this morning, as did Gfk Consumer Confidence for Germany. Tomorrow there is a slew of economic data, and watch out for ECB rate setters making speeches too.
USD: Dollar stable
The US dollar has slipped against most currencies over the past 24 hours – even the pound – but remains slightly up on the week against sterling and the Australian and New Zealand dollars.
Yesterday’s Durable Goods Orders data confounded expectations, rising by 0.7%.
Upcoming this week we have a speech from Federal Reserve Chair Jerome Powell tomorrow, then personal spending data on Thursday.