Euro Weakens on Political Risk

Sterling came under pressure last week as mixed economic releases offered little support. Sterling-euro briefly dipped below 1.1100 whilst sterling-dollar continued to hold above 1.3000. The pound dipped again Friday morning after meeting resistance against the dollar at 1.3260, before later correcting in end of week trading.

Previous Day's Market Highlights

Sterling came under pressure last week as mixed economic releases offered little support. Sterling-euro briefly dipped below 1.1100 whilst sterling-dollar continued to hold above 1.3000. The pound dipped again Friday morning after meeting resistance against the dollar at 1.3260, before later correcting in end of week trading.  
 
The Canadian dollar lost ground against the pound Friday afternoon after CPI met expectations, slowing year on year to 1.4% from 1.6%. Softer CPI pushes back rate hike expectations.
 
The euro fell Sunday evening as Asian markets opened following reports that German coalition talks had suffered setbacks. The possibility of another election renews political risk. Euro-dollar fell back below 1.1800 whilst sterling-euro regained ground above 1.1200.

Currency Pairing 08:00 Today Vs 08:00 Yesterday Four-Week High Four-Week Low % Change
GBP / EUR 1.1267 1.1451 1.1092 3.14%
GBP / USD 1.3242 1.3321 1.3039 2.12%
EUR / USD 1.1752 1.1858 1.1553 2.57%
GBP/AUD 1.7509 1.7540 1.6852 3.92%
GBP / NZD 1.9386 1.9433 1.8787 3.32%
GBP / CAD 1.6910 1.7171 1.6589 3.39%

Today's Market Highlights

Brexit will be in focus with EU negotiator Michel Barnier to give a progress update and PM May awaiting approval on a divorce bill offer increase. Brexit headlines pose a downside risk to the pound, although signs of progress may see sterling strengthen.
 
In addition to renewed political risk, the euro will also digest several ECB speeches for any signals on the future of monetary policy. ECB President Draghi will give two introductory statements at the ECON Hearing at the European Parliament (14:00, 16:00 GMT).
 
Lautenschläger is to give the keynote speech at the IIF European CRO Forum (12:15 GMT). VP Constancio will chair a panel discussion on “Fiscal and financial union: complements or substitutes?” at an ECB conference (14:15 GMT).
 
MPC Member Ramsden speaks tonight on “Monetary Policy from End to End: Joining the MPC” (18:30 GMT). Overnight, the RBA releases its latest meeting minutes.
 
Looking further ahead this week, Wednesday will be a key day with the UK’s Autumn Budget and the November Fed meeting minutes both expected. On Thursday, the UK releases the second estimate of Q3 GDP, while the US will be celebrating the Thanksgiving holiday. Canada and New Zealand both release Retail Sales. The Trump administration’s tax plans will remain in focus.