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By Currencies Direct’s Philip McHugh on 11 January 2019

The pound struggled throughout much of yesterday’s session as markets became increasingly wary of the pound ahead of the upcoming Brexit vote.

Sterling remains on the back foot this morning, with GBP/EUR edging down to €1.1054, GBP/USD subdued at $1.2734 and GBP/CAD sliding to C$1.6804, while both GBP/AUD and GBP/NZD slump to AU$1.7660 and NZ$1.8658 respectively.

In the spotlight today will be the latest US CPI figures, with the US dollar potentially weakening if US inflation fell faster than expected last month.

What’s been happening?

The pound continued to languish on Thursday as Brexit jitters became increasingly pronounced in the run up to next week’s vote on Theresa May’s EU withdrawal deal.

The uncertainty surrounding Brexit was not helped by Jeremy Corbyn, with the Labour leader calling for a general election to solve the ‘Brexit deadlock’.

However the GBP/EUR exchange rate was still able to hold its ground yesterday as the euro was undermined by the release of the minutes from the European Central Bank’s (ECB) December meeting.

The minutes revealed a divide in the ECB over whether to downgrade its economic outlook for 2019, throwing a planned rate hike after the summer into question.

Meanwhile, the GBP/USD exchange rate fell back at the start of Thursday’s session and remained on the defensive throughout the day, despite comments from Federal Reserve Chairman Jerome Powell later in the evening reiterating the Fed’s need for patience this year.

What’s coming up?

Looking ahead, the US CPI figures are likely to be closely watched by USD investors this afternoon as they look for any additional signs that the US economy may be slowing.

While the drop in oil prices at the tail end of 2018 will explain away a modest drop in domestic inflation last month, should inflation have dropped faster than expected as it has in many other countries, we may see the US dollar plummet as it fuels speculation of a rate pause from the Fed this year.

Meanwhile, the release of the UK’s latest GDP figures may dictate the direction of the pound today, with Sterling potentially weakening if UK economic growth remained muted in November.

Finally, the absence of any Eurozone data may limit movement in the euro today, with the single currency likely to be left at the mercy of markets.