GBPEUR hits highs of 1.2054, big week of UK economic data
Euro trading at three year lows
USD remains strong
GBP continues to trade modestly versus the USD as markets hold back awaiting news on how UK-EU trade talks go over the upcoming months. There currently seems to be pessimism surround the talks although it seems the UK is not asking for a special deal, just merely the same deal the EU have already given Canada and South Korea, especially around the trade free tariffs.
GBPEUR trades higher however, reaching a high of 1.2054 late Friday, and remains one of the best performing currencies on 2020. This said, with trade talks expected to late most of 2020, it could well be as volatile as 2019 for the pound.
Econiomic data to note this week in the UK – Tuesday: UK average weekly earnings, labour market data, Wednesday: UK inflation data, Thursday: UK retail sales data, Friday: UK flash manufacturing, services, composite PMI data. The key releases to watch in my view will be inflation and PMI data. Any hiccup in these releases may see the BOE get called upon to act sooner rather than later, as post-election euphoria may prove to be short-lived.
The Euro was trading at three year lows this morning as the markets expressed concerns of weakening growth in the region. Markets will now be looking to data over the course of the week to seek further evidence on the state of the eurozone.
EURUSD trading just above the 1.08 level, and with no immediate move higher, looks comfortable there until further news develops.
The USD remains strong on low risk appetite as well as traders seeking the high yields the Fed provides. Furthermore, the USD consumer prices picked up in Jan which cemented the Feds comments that the US consumer has confidence in the economy despite coronavirus fears.
Market update byAmir Mehrad
14 years experience in deliverable foreign exchange, over 7 as CEO of Effective FX
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