Sterling continued its downward trajectory over the last 24 hours, as the rate against the dollar continued to drop. Over the last few weeks, the pound hit 1.35 with happiness over the general- election result and relief that there would be some certainty. However, the realities of Brexit, and the potential for a “no deal” still being on the table, the rate is now just below 1.30. The euro has had a decent few days, with the pound lagging behind both the euro and the dollar.
Dollar Makes Small Gains
Whilst the pound seems to have stabilised at the 1.30 level against the US dollar, which was expected following the general election two weeks ago, there are fears it could drop further to 1.27/1.28. The dollar was surprisingly active over the last day, as the Dow Jones jumped over 100 points partially due to the resignation of Boeing’s CEO over unsafe planes.
However, weak economic statistics were published, with durable goods and new home sales data missing targets. Analysts are hopeful for 2020, with the signs of a phase one trade deal with China expected to be signed in January. On Monday, China cut tariffs on hundreds of products, which has sent encouraging signs to the market.
Looking over at the euro, it seems to be doing better this Christmas week. This might be attributed to encouraging import statistics from Germany, but this was low-tier data on pricing.
Labour Leadership Race Slowly Underway
Here in the UK, everything has slowed down for the festive period. The political focus for the moment is on the Labour Party leadership race (race might be a strong word as it barely seems to have started yet). However, this is unlikely to have an impact on the markets, given Boris Johnson’s 80 strong majority and the never-ending story of Brexit.
Today will be quiet as the markets close early- but analysts are all well aware that 31st January is just around the corner, and with that comes Brexit, the Brexit transition period, trade deal negotiations and who knows what else. We hope you have a lovely Christmas and we will be back on the 27th!
For more GBP/EUR news or if you have a currency requirement you can get in touch with me, Tom Holian, directly at [email protected], or call +44 (0) 1494 360 899 to discuss these factors in more detail.