Data releases and Brexit tensions motivating markets today

Sterling had another torrid time on Monday, falling to its lowest levels since the end of October, while there's ongoing risk of a rally ahead of Carney's Brexit testimony.

Previous Day's Market Highlights

Sterling had another torrid time on Monday, falling to its lowest levels since the end of October on escalating concerns that parliamentary approval for the Brexit Withdrawal Agreement is unlikely. The pound fell 0.7% against the dollar and 0.4% against the euro despite comments from PM May downplaying speculation of a resignation by affirming that she would still be in her job in two weeks’ time.
 
On the data front, manufacturing PMIs from the Eurozone, UK and US beat expectations, with the US figure being the highest recorded since September. In addition, manufacturing PMI figures from Canada were in line with the market consensus, hitting a three month high.
 
Major market moves were experienced in both equities and commodities, with European indices gaining over 1% and oil prices jumping by 3%. The impetus for this market rally came from the Sino-US trade truce agreed on the sidelines of the G20 summit at the weekend. US equity markets also gained, with the major benchmarks up more than 1% 
 
Finally, overnight, the Reserve Bank of Australia kept interest rates on hold with their accompanying rate statement reiterating that low rates are supporting the economy with progress on inflation and unemployment expected to be gradual. The Aussie dollar was broadly unchanged as the meeting was in line with expectations.

Currency Pairing 08:00 Today Vs 08:00 Yesterday Four-Week High Four-Week Low % Change
GBP/EUR 1.1189 1.1506 1.1188 2.71%
GBP/USD 1.2738 1.3175 1.2723 3.43%
EUR/USD 1.1382 1.1500 1.1275 1.96%
GBP/AUD 1.7253 1.8148 1.7210 4.81%
GBP/NZD 1.8302 1.9648 1.8290 6.46%
GBP/CAD 1.6775 1.7285 1.6721 3.26%

Today's Market Highlights

A slightly quieter day for data begins with the release of UK Construction PMI figures for November, forecast at 52.5. While this figure would indicate continued expansion in the construction industry, it would be a significant downtick from the previous release. Despite this, market participants are likely to shrug off the data with a continued focus remaining on the ongoing political situation in the UK and the parliamentary debate on Brexit legislation.
 
Other highlights include PPI figures for the Eurozone, expected to remain flat at 0.5% on a month-on-month basis in addition to Canadian labour productivity statistics as well as the twice monthly New Zealand dairy prices index. The latter is a good indicator of New Zealand’s trade balance due to the economy’s dependence on commodity prices.
 
Central bank speakers will also be in focus, with the main highlight set to be BoE Governor Carney testifying to parliament on the Brexit Withdrawal Agreement and the BoE’s scenario analysis published last week. Market participants will be looking for comments regarding monetary policy and the health of the UK economy post-March 2019. Other central bank speakers include Fed voter Williams and the BoE’s Vlieghe. Finally, today is the first of five days of Parliamentary debate on the Brexit Withdrawal Agreement.

Today's Economic Calendar

Time Currency Release Consensus Previous
9:15am GBP BoE Gov. Carney Testimony
9:30am GBP Construction PMI 52.5 53.2
10:00am EUR PPI (m/m) 0.5% 0.5%