• Sterling at mercy of wider market moves
  • Italian industrial output up
  • Trump promises “fire and fury” 

Sterling suffers from poor BRC retail sales

The pound suffered increased volatility yesterday, seeing significant swings against the dollar and euro before ending the day down against the dollar and flat against the euro. A lack of notable data releases left the currency struggling for traction and under pressure as soon as the European session got underway. The BRC retail sales number released early on posted a disappointing loss, the second one in as many months, which left sentiment towards the UK economy falling.

A lack of economic data releases today is unlikely to see the pound provided with much support. However, with tensions rising between the US and North Korea the pound may be able to stretch its legs if uncertainty for the dollar persists.

Euro mixed after disappointing German data

The single currency posted a mixed performance yesterday, trading flat against the pound and losing over 0.3% against the dollar. Disappointing German import and export numbers combined with mixed French trade numbers left investors cautious towards the single currency. This poor data combined with positive US jobs data left the single currency struggling.

The only European data release today was Italian industrial output which, while better than expected, has had a limited impact on the single currency. News released this morning that a car drove into a group of soldiers in Paris has seen risk-off sentiment rise within the Eurozone and saw a short-term sell-off of the euro.

Dollar volatile due to NK tension

The dollar performed well yesterday, gaining ground across the board and ending the day up an average of 0.35%. A significantly better than expected JOLTS job openings number provided the currency with the bulk of the support as it supported the positive employment data from last week.

However, sentiment towards the dollar has shifted overnight as tensions between the US and North Korea continue to rise. Rumours that North Korea was considering a pre-emptive strike against the US at its naval base in Guam saw President Trump fire back with promises of “fire and fury” against the hermit kingdom.

Today we have the release of US labour costs as well as productivity numbers, which look set to paint a mixed picture of the US economy and could see further uncertainty weigh on the currency.

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