Sterling continues to broadly trade an interbank range of 1.1650- 1.1750 (1.1687 at the time of writing) as the market eyes up it’s next move.

Freedom Day delayed

Politics continue to dominate the headlines and the value of Sterling however, the uncertainty that was felt in the second half of 2019 has eased and allowed the pound to rise significantly in value. Since October alone Sterling has risen 9% against the Euro and 10.7% against the Dollar from the point that PM Boris Johnson first announced he’d agreed terms of the UK’s exit with the EU. The PMs Withdrawal Bill has now successfully passed though the House of Commons and negotiations will begin on trade terms in the New Year as we head towards the now all-important 31st December 2020 deadline for a trade agreement to be secured.

Releases this week of note come at the beginning of a fresh year with Manufacturing PMI on Thursday followed by Construction PMI on Friday both previously having signalled in November that the UK economy was under significant pressure in the face of Brexit uncertainty.


German Economic Data Releases

The economic calendar for Europe is dominated by German data releases this week with retail Sales this morning, Markit Manufacturing PMI on Thursday and the Unemployment Rate and Consumer Price Index on Friday. As the Powerhouse of Europe the German economy is predicted to have grown only 0.5pc in 2019 following a decade of strong economic performance. These releases will be closely watched. Consumer spending activity is of particular importance given the sharp decline of -1.9pc posted for October.

In wider context the European Central Bank final economic bulletin of 2019 note a stabilisation in global economic activity which could lend itself to a more positive economic tone through 2020 for the Bloc. However, political uncertainty regarding Brexit is still a key concern as Ursula von der Leyen, the president of the European commission expressed her concerns that such time won’t be enough to define the future relationship between the EU and the UK.

US-China Trade War Latest

US-China Trade War Latest

The USD has been moving quickly through the festive period as thin trading conditions and a rollercoaster of releases relating to either progress or stalling of the US-China Trade Wars as the current state of play becomes increasingly unclear.

The GBP/USD exchange rate has moved around 2.5 cents from high to low since December 25th (1.2903-1.3125) currently sitting over 1.31 on the interbank level.

Interestingly, the IMF predict that US-China trade tensions will have reduced global GDP by 0.8 percent by the beginning of next year, contributing to slowed global economic growth, which stands at 3 percent for 2019.

We start the New Year with some key releases from the States, of particular note jobless claims and ISM manufacturing data. In particular the ISM release follows on from four consecutive readings below 50 reading which indicate that business conditions are getting worse.

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