Post date: 09/03/2018 18:00
The Sterling ended the week on a high once again. It is the highest it’s been all week against the EUR and bounced up against the USD to roughly a week high before the weekend. At the start of the week, the pound jumped up slightly on the back of economic growth in the UK. It might be stronger than expected after a closely-watched index suggested the services sector is now the fastest growing part of the economy. Construction and manufacturing are however, still performing weaker in the UK.
Theresa May suggested that a technical border could be an option for Ireland. Discussions between officials are under way to consider a European Parliament Committee report on ways to avoid a hard boarder between the Republic of Ireland and Northern Ireland.
Phillip Hammond has taken part in further Brexit negotiations. He demanded financial services be included in any future trade deals. He made a major speech in central London dismissing the argument that the City cannot feature in a trade deal with the EU. This put some confidence in the Sterling producing short positive spikes.
The EUR started the week trading down 0.4% against the USD. This comes after the Italian parliamentary elections resulted in a political gridlock. This is due to the anti-Euro and anti-immigrant parties gaining the majority of votes in the Italian parliamentary election. This put the EUR at risk at the start of the week.
The euro-zone featured some decent results as Merkel was due to lead her fourth government after forming a coalition. The Eurozone also had a good week data wise with plenty of key data featuring better than expected. Deutsche Bank, one of the world’s largest currency dealers, believes a decline in the Pound-to-Euro exchange rate can be expected as the Pound and GDP continue to perform worse than expected.
To start the week the US posted good PMI data. With all pieces of data featuring better than expected – but all eyes were on Trump taking the headlines as usual. Trump’s recent comments and suggestions that he may look to impose tariffs on steel, aluminium and motor vehicles has really hit global markets and caused a stock market sell in the previous week.
The Canadian Dollar has been affected by this most as we see GBP/CAD hitting a fresh 3 year high. This causes concerns for the Canadian economy and the NAFTA agreement. Meanwhile the EU have stated that everyone could be a loser should there be a trade war. Politics appear to be dominating the headlines at the moment with economic data not really making a significant difference. Again a big finish to the week data wise with Nonfarm payrolls released at half 1, performing better than expected – no real effects on the USD.