- Surprisingly upbeat CBI report boosts Sterling
- Nervous markets ahead of tomorrow’s US holiday
The minute central government gets involved in construction, the bills mushroom. You know the problems are real when the consultants hired to keep the Olympic project within budget is actually running over budget. So, fellow taxpayers, get ready for the flurry of stealth taxes in the coming years. And while you are waiting, the markets will be very volatile ahead of the US holiday and especially so following yesterday’s surprising data releases. Sterling got a boot up the backside from the Confederation of British Industry Industrial trends report which was far more upbeat than any forecaster had predicted. The Pound gained against all comers through the day and even broke above $1.90. The only other significant data was a sharp decline in Canadian retail sales and GBPCAD is very attractive for Canada bound migrants this morning. Today brings a wave of data from both sides of the Channel and form both sides of the Atlantic as well. It is also the last working day before most of America heads off to gorge on Turkey and give thanks for …… well everything really. The lack of an American market over the last two days of this week will mean that many US traders will take this afternoon to square their books and that probably means buying US Dollars. As for the UK, focussed on this morning’s Monetary Policy Committee meeting minutes and the guessing game over whether they voted 8-1 or 7-2 for an interest rate hike when they last met. An 8-1 result would probably have left the Pound on hold but the fact that only 7 committee members voted for a hike has caused some decline in the Pound against everything. Have a great Wednesday, Happy Thanksgiving to all our American clients and I’ll catch up with everyone else tomorrow - assuming I haven’t been fingerprinted at the roadside or invented a workable nuclear fusion machine in the interim.
Sterling is riding high against the US Dollar this morning after the CBI report boosted Sterling’s fortunes. As mentioned above, other than the BoE minutes this is an empty day for UK data and so we have to watch and wait for the US initial jobless claims and the University of Michigan consumer sentiment index before we will see any major moves. Both are expected to be rather better news for the USD than recent data and that, combined with the impending long weekend for most US traders, will almost ensure some USD buying before the close of UK trade. In fact most US markets are closed for the afternoon today so most of the action will be over before the UK closes. We usually have a shuffle in the markets around 4.30UK time which marks the close of the UK financial markets and today’s will be more significant than usual. US Dollar buyers – on your marks, get set, go.
Sterling is pressing against the top of the range against the Euro after yesterday’s data and that Euro is a weaker ahead of this morning’s Eurozone industrial orders which are expected to be weaker than the previous reading. That is no surprise with German manufacturers complaining about export markets and the strength of the Euro and certainly not a surprise when you consider the slowdown in the US market; a significant destination for Eurozone produce. As with GBPUSD, the upward move over the last 24 hours may well run out of steam today after the Bank of England voted 7-2 to raise the UK base rate. The two dissenters wanted to leave the UK base rate on hold and that is a less hawkish result than the markets had expected. Also as with US Dollar buyers, Euro buyers should be acting rather than waiting.
Thanksgiving dinners take eighteen hours to prepare. They are consumed in twelve minutes. Half-times take twelve minutes. This is not coincidence.
Erma Bombec
FX Research and Analysis undertaken by:
David Johnson - Halo Financial
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