• Brexit talks continue to drive sterling gains
  • French inflation better than expected
  • US GDP hit by continuing rumours of a shut down

Sterling gained despite mixed data

The pound continued its positive run yesterday, albeit at a slightly slower rate than prior. By the end of the day the currency had gained nearly half a percent against the dollar and just shy of 0.4% against the euro. Poor mortgage data and consumer credit numbers failed to provide the currency with any support, however sentiment remained buoyant that an agreement had been, or was at least close, to being agreed between the EU and UK to unlock further Brexit talks.

A lack of economic data releases today, will likely leave focus on wider markets however if we see any further rumours pertaining to the rumoured Brexit agreement we may see some more upside for sterling.

Euro struggles on wider market pressure

The single currency gained marginally against the dollar yesterday and lost 0.4% against the pound despite a positive batch of European data releases. French GDP came out in line with expectation at 0.5% and German CPI inflation rose more than expected, up 0.2%. Despite this positive data, a strengthening pound combined with political uncertainty in the Eurozone saw the euro slip.

The euro has suffered from increased downside pressure this morning as data releases from Germany and France painted a mixed picture. Whilst German retail sales fell 1.7% to -1.5%, a positive French inflation number likely capped the downside move for the euro.

Dollar struggles on ongoing uncertainty 

The greenback lost nominally to the euro yesterday but fell getting on for half a percent against the pound. This poor performance came despite a positive GDP number which rose 0.1% more than expected, from 3% to 3.3%. Despite this positive number, ongoing uncertainty surrounding Donald Trump and his long awaited tax reform bill combined with rumours that a government shutdown could be on the horizon left the dollar struggling.

Today we have the release of US consumption and income figures, which both look set to fall from prior. If these predictions are correct we may see the dollar continue to lose ground, cementing its largest monthly drop since July.

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