- USD retreats as risk sentiment improves
- GBP pushes higher after UK economy avoids negative growth
- Sanders secures narrow victory in New Hampshire
Sterling enjoyed some respite Tuesday after British economic growth coming in as flat after markets showed concern it would be slower which could indiciate to the Bank of England that an interest rate cut would be needed. The currency had on Monday touched its lowest levels for this year amid uncertainty over Britain’s future trade relationship with the European Union.
Preliminary data for fourth-quarter gross domestic product showed the economy grew 1.1% year-on-year, the same as in the previous quarter. Economists polled by Reuters had forecast growth of only 0.8%.The data came as a reassurance to investors that the Bank of England (BoE) was unlikely to pursue a looser monetary policy. At its previous meeting, the BoE signalled it was more interested in seeing if growth picked up after the December election.
- The euro remains under pressure across the board this week as risk sentiment remains off as well as investors concerns about the single currency. Markets await industrial production data at 9.30am for further direction.
- The USD retreated vs the pound and a basket of currencies as risk sentiment in the markets. Comments from a top Chinese health advisers suggesting that coronavirus outbreak may be peaking saw the dollar pull back and the S&P 500 and Nasdaw index rally. In recent months we have seen a strong dollar, as investors continue to execute “carry-trades” where funds are borrowed in loinvested in low-yeild currencies such as the Euro and invest in high-yielding currency such as the USD. Currently, the GBPUSD pair trading mid 1.29, and EURUSD trade just above 1.09.