Weekly Market Report 18/04/2017

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BREAKING NEWS
Theresa May has called for a general election on June 8th to give Britain the ‘strong and stable leadership’ needed to deliver Brexit

GBP

Last week saw sterling gain against our two most commonly traded currency pairs GBP/EUR and GBP/USD, bringing GBP/EUR to a fresh one-month high. The gains had been caused better than expected average earnings index figures.

The positive data yesterday has given some suggestion that the BOE may look at a rate hike over the next few months. This would be highly positive for the UK in the long term as an increase in interest rates would boost the interest of the pound to overseas investors thus strengthening the pound.

USD

President Trump’s remarks last week about the dollar and US monetary policy offer more evidence that America’s strong dollar policy, launched in 1995 by Treasury Secretary Robert Rubin when the dollar was near post-war lows, is now changing.

The President said that a strong dollar “sounds good”, but added that “our dollar is getting too strong…it is very, very hard to compete when you have a strong dollar and other countries are devaluing their currency”. He also said that he “likes a low interest rate policy”

EUR

Volatility in the euro has soared to the highest levels since the weeks before the Brexit vote as investors grapple with the risk of a populist triumph in France’s presidential election. The first round of voting next Sunday is forcing investors to focus on a presidential race that opinion polls suggest will see Marine Le Pen, the far-right leader of the National Front, through to the second-round run-off on May 7.

While the odds of Ms Le Pen, who wants to pull France out of the euro, triumphing in the second round remain long, investors are uneasy at the fluctuations in the polls, particularly the recent momentum generated by far-left candidate Jean-Luc Mélenchon, who has vowed to renegotiate the country’s relationship with the EU.

 

Dates to look out for:

EUR – Consumer Price Index – 19/04/17

GBP – BOE’s Governor Carney speech – 20/04/17

USD – Treasury Sec Mnuchin speech – 20/04/17

CAD – Consumer Price Index – 21/04/17

 

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