GBPUSD Breaks 1.35 for First Time in Two Months

Sterling extended gains yesterday. Manufacturing data is in focus today.

Previous Day's Market Highlights

Sterling extended gains yesterday before later seeing some pullback. The pound hit two-month highs against the dollar and one-month highs against the euro, trading at its highest levels against the Canadian dollar since June and against the Aussie and kiwidollars in over a year. Additional dollar weakness boosted sterling-dollar above 1.3500 for the first time since 26 September.
 
The pound extended gains on reports of progress in Brexit negotiations, first over the divorce bill and later over the Irish border. The euro fluctuated as preliminary November CPI disappointed, with core inflation unexpectedly holding below 1.0%. This overshadowed a further drop in the Eurozone’s Unemployment Rate to 8.8%.
 
US data were mixed: Personal Consumption Expenditures slowed less than expected compared to a year ago, to 1.6% from 1.7%, while Personal Income was slightly higher than forecast. Initial Jobless Claims were lower than expected, off-setting the upwards revision to the previous week’s figure.  

Currency Pairing 08:00 Today Vs 08:00 Yesterday Four-Week High Four-Week Low % Change
GBP / EUR 1.1350 1.1394 1.1092 2.65%
GBP / USD 1.3525 1.3550 1.3039 3.77%
EUR / USD 1.1915 1.1961 1.1553 3.41%
GBP/AUD 1.7870 1.7910 1.6924 5.51%
GBP / NZD 1.9800 1.9836 1.8787 5.29%
GBP / CAD 1.7401 1.7468 1.6589 5.03%

Today's Market Highlights

Manufacturing data are in focus today. A gain in this morning’s UK Manufacturing PMI (09:30 GMT) could offer sterling support. The US’s ISM index is forecast to dip in the afternoon, which could add to recent pressure on the dollar.
 
Fed speakers and any developments in the tax bill debate will also be key drivers for the dollar. Any signs that tax reform is progressing could strengthen the dollar.
 
For Canadian dollar traders, GDP and employment data will be of interest.  A return to growth in September and a dip in the Unemployment Rate could see the loonie gain this afternoon, although the upside may be limited with no additional BoC rate hikes expected until next year.
 
The next two weeks will be busy ahead of the holiday period. US ADP and Nonfarm Payrolls will be key next week, with UK CPI and employment data out the following week, as well as meetings of the Fed, BoE, and ECB, and the final EU Summit before the turn of the year.

Today's Economic Calendar

Time Currency Release Consensus Previous
09:30 GBP Markit Manufacturing PMI (Nov) 56.5 56.3
13:30 CAD GDP Annualized QoQ (Q3) 1.6% 4.5%
13:30 CAD GDP MoM (Sep) 0.1% -0.1%
13:30 CAD Unemployment Rate (Nov) 6.2% 6.3%
13:30 CAD Net Change in Employment (Nov) 10.0K 35.3K
13:30 CAD Participation Rate (Nov) 65.7%
14:05 USD Fed's Bullard Speaks
14:30 USD Fed's Kaplan Speaks
14:30 CAD Markit Manufacturing PMI (Nov) 54.3
14:45 USD Markit Manufacturing PMI (Nov) 53.8 53.8
15:00 USD ISM Manufacturing PMI (Nov) 58.4 58.7
15:00 USD ISM Prices Paid (Nov) 67.0 68.5
15:00 USD Construction Spending MoM (Oct) 0.5% 0.3%
15:15 USD Fed's Harker Speaks