GBP Heads Lower to 1.27 Support In Spite Of Last Weekend’s Brexit Agreement

Nov. 27, 2018 (Western Union Business Solutions)  – The U.S. dollar was mostly steady while the U.K. pound broke below support, hitting its lowest level in nearly two weeks. The greenback otherwise was little changed against the euro, yen and Canadian dollar. Broader market sentiment was subdued following a strong day on Wall Street. The dollar remains well supported by elevated political uncertainty in Europe. Still, dollar gains have been capped by caution ahead of a speech Wednesday, at noon ET, by Jerome Powell, the head of America’s central bank. There’s a risk that Mr. Powell could tone down his optimism about the U.S. economy with global growth showing steady signs of slowing. Lots of risk events loom over the balance of the week, including Thursday when the U.S. issues data on the consumer, inflation and the minutes of the last Fed meeting, and Friday when the G20 meets in Argentina where President Trump and China’s president are expected to discuss their trade feud.

 

GBP

 

The pound ‘s 0.5% slide led major currencies lower, underscoring how the weekend Brexit agreement between the U.K. and EU didn’t prove to be a game changer for sterling. Moreover, comments from President Trump this week highlighted an uncertain outlook for trans-Atlantic trade to the detriment of the pound. It may be a while yet before Britain can negotiate trade deals with its non-EU counterparts.

 

CAD

 

Canada’s dollar steadied after an overnight brush with one-week lows. Oil prices softened after a Monday rally which kept commodity currencies on a vulnerable footing. Oil’s recent slide to almost below $50 from above $75 in recent weeks was the chief catalyst that knocked the loonie to late June lows last week. Canadian growth data Friday will shed some light on the local interest rate outlook, a narrative that’s proven loonie-positive following five rate increases by the Bank of Canada since mid-2017.

 

EUR

 

Like sterling, the euro also flirted with two-week lows against the greenback. The euro’s quick start to the week faded after remarks from Mario Draghi, the president of the ECB, played up economic fragility. Mr. Draghi’s comments Monday came on the same day that Germany released another lackluster report on business confidence. Meanwhile, Italy’s precarious budget situation has done little to inspire buying of the single currency.


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