Pound (GBP) Firms after Johnson’s Upbeat Brexit Comments
After initially stumbling to a three-week low, the Pound (GBP) rebounded yesterday on the back of Boris Johnson’s optimisic comments regarding a post-Brexit trade deal with the EU.
Speaking to the BBC, Johnson claimed it is ‘enormously, epically likely’ that the UK will have a comprehensive trade deal with the EU by the end of 2020.
However, Sterling could tumble again this morning with the publication of the UK’s consumer price index.
Economists forecast today’s figures will show UK inflation stagnated at a three-year low in December, likely dragging on GBP exchange rates as it stokes speculation of a rate cut from the Bank of England (BoE) this month.
Euro (EUR) Weakens Ahead of German GDP Print
The Euro (EUR) was left on the back foot on Tuesday as the single currency struggled to find momentum in the continued absence of any notable data releases.
The Euro may extend these losses this morning with the publication of Germany’s annual GDP report.
Analysts predict this will show growth in the Eurozone’s largest country plummeted last year, falling from 1.5% to 0.6% as Germany’s economy was buffeted by US-China trade tensions and slowing global growth.
US Dollar (USD) Muted Despite Uptick in Inflation
The US Dollar (USD) was mostly flat through yesterday’s session in spite of US CPI figures reporting that headline inflation struck a new one-year high in December.
While annualised inflation accelerated from 2.1% to 2.3%, month-on-month growth fell short of expectations, slowing from 0.3% to 0.2% and capping any upside in USD exchange rates.
Looking ahead, the focus for USD investors today will be on the signing of a ‘phase one’ trade deal between the US and China, with the US Dollar potentially strengthening if the deal is seen as bolstering US growth.
Canadian Dollar (CAD) Flat as Oil Prices Stall at $58
The Canadian Dollar (CAD) traded in a narrow range on Tuesday, with the commodity-linked currency struggling to find purchase as WTI crude prices stalled at $58 a barrel, well below the highs of $65 struck last week.
Australian Dollar (AUD) Dips Ahead of US-China Trade Deal
The Australian Dollar (AUD) ticked lower overnight on Tuesday amid some caution ahead of today’s signing of a ‘phase one’ trade deal between the US and China, with fears the deal may not be as comprehensive as hoped.
New Zealand Dollar (NZD) Undermined by Risk-Off Mood
The New Zealand Dollar (NZD) also edged lower overnight as a cautious mood in markets saw investors shy away from the risk-sensitive ‘Kiwi’.