19 June 2019
Sterling started the day yesterday on the back foot yet again as Brexit and political woes continued to sour sentiment. However, a sharp euro sell-off and improving risk appetite saw the pound recover from 5-month lows to close in the black and at its day’s highs against both the dollar and euro.
Although the current situation component of the German ZEW survey came in slightly above consensus, expectations fell to their lowest level since last November. Uncertainty over the global economy and a weaker Q2 domestically were the drivers of weak sentiment. The Eurozone trade surplus narrowed on the back of a decline in both exports and imports as had been seen previously in the German report. However, it wasn’t data that drove the euro lower yesterday. ECB President Draghi delivered an unequivocally dovish outlook that opens the door for a September rate cut and finally aligns the central bank with a series of downgrades to growth and inflation.
Unsurprisingly, it didn’t take President Trump long to react to the ECB news. He said it was ‘unfairly easier for them to compete against the US’, a statement that was as much a shot at the Fed ahead of tonight’s meeting as it was the ECB. The President was more upbeat with regard to trade talks though as he noted a ‘very good conversation’ with Chinese President Xi and that they will have an extended meeting at next week’s G20 in Japan. The comments boosted general risk sentiment.
Data and events
UK inflation is the data highlight of the day. Headline and core readings are both expected to slip a notch but ultimately the focus for the UK remains on the political front. In any case, the real highlight of the day is tonight’s FOMC policy meeting. All eyes will be on Chairman Powell to see if he ramps up earlier dovish comments with talk of a rate cut.
Open a free account or contact us (Ireland: 1800 246 801 UK: 0800 840 2887) to discuss your payment needs, as we can guarantee to provide a payment solution that aligns best with your business.
Please note that this update is provided by Fexco Corporate Payments for your information only. It does not constitute advice. You must rely entirely on your own judgement when making an Order and entering into a contract with Fexco Corporate Payments and any decision you make to buy and/or sell currency is made solely on your own judgement. Fexco Corporate Payments is regulated by the Central Bank of Ireland and is regulated by the Financial Conduct Authority for the conduct of payment business in the UK