Weekly Market Report 19/02/2018

GBP

The pound was still seeing volatility last week as markets were still reeling from to the BoE’s first policy meeting of the year as well as the latest developments regarding Brexit.

Sterling suffered some early losses on Monday as concerns over Brexit and the unity of the UK government prompted investors to shy away from the currency. GBP/EUR fell 1.12 and GBP/USD went as low as 1.38. cable rose after a stronger-than-expected uptick in producer prices, meaning manufacturers may soon have to start charging more for the goods they are making, contributing to even stronger inflation.

Investors have been reacted poorly to Downing Street’s insistence that the UK would leave the EU customs union post-Brexit, something that Barnier warned would make trade barriers with the EU ‘unescapable’.  Sterling made some slight retracing steps on Friday returning to 1.40 against the greenback and 1.1250 against the single currency. This week should see some added GBP speculation as Mark Carney will be speaking on Monday afternoon; he usually has an immediate affect on the pound depending on how his sentiment is viewed.

EUR

The euro struggled to stabilise against the other majors last week, following the release of some mixed economic data.  EUR sentiment suffered another blow following the release of poor industrial production data which showed that factory output in Europe had shrank more than expected at the end of last year.
With this week’s session set to be a lot quieter in terms of data, movement in the euro may instead be driven by political sentiment, with further talks and developments in the German coalition the run up to elections in Italy likely to be key sources of momentum. All eyes will be towards the EU non-monetary speech on Wednesday.

USD
Last week saw the US dollar put in its best performance so far in 2018, as investors flocked to the currency amid growing speculation that the Federal Reserve could implement up to four rate hikes this year.
USD shot higher last Monday as markets welcomed suggestions that the Fed may choose to speed up the pace of its monetary tightening in 2018. This prompted a major sell-off on the stock markets, which in turn bolstered the US dollar as investors flocked to the safe haven currency amid fears of a possible crash.  It’s a quiet week on the data front for the US with only ‘jobless claims’ on Friday to note.

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