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POUND STERLING (GBP)
UK consumer lending and mortgage approvals data both exceeded market expectations which suggested a solid retail tone, although consumer confidence weakened. There was a slight lull in political developments with no sign of any shift in expectations that the Brexit deal would be rejected in parliament. Market and political chatter was, therefore, focused on subsequent moves and tactics after any no vote as divisions continued. Sterling overall lost ground with expectations of month-end selling a negative factor and GBP/EUR dipped to 1.1220 while GBP/USD held below 1.2800 ahead of G20.
Euro-zone data suggested some stabilization in business confidence, although investors remained unconvinced over near-term growth trends, especially with a high degree of market uncertainty surrounding US trade policies and Chinese growth. A slight decline in German inflation failed to shift ECB policy expectations while Italian budget concerns eased slightly. The Euro garnered some support from a weaker dollar without being able to secure any significant momentum. EUR/USD was again held just below the 1.1400 level on Friday in tentative trading as the Euro held firm on the crosses.
Minutes from November’s Federal Reserve policy meeting did not change the market narrative with strong suggestions that interest rates would be raised again in December, but that policymakers could then signal a pause. The dollar failed to regain momentum after Wednesday’s losses as domestic political uncertainty increased, but potential US sellers also remained cautious, especially with uncertainty ahead of the G20 talks and the meeting between President Trump and Chinese President Xi. USD/JPY held around 113.40 and braced for sharp moves on Monday in reaction to trade rhetoric.
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