Brexit piles pressure on Sterling despite positive data

Having started the week on the back foot, the pound has recovered marginally against its counterparts.

Having started the week on the back foot, the pound has recovered marginally against its counterparts.

Over the weekend, Theresa May suggested that the UK might leave the single market if there was no compromise on the free movement of people. The comments have been interpreted by foreign exchange markets as pointing towards a ëhard Brexití, which pushed Sterling lower across the board at the start of the week.

The Prime Minister was quick to lay blame on the media for misconstruing her remarks and Sterling has managed to recover slightly amidst positive data from the economy. Forecasts show that inflation is on an upward trajectory for 2017 and the FTSE is trading at record highs.

Carney wary of Brexit dangers

Governor of the Bank of England, Mark Carney, spoke yesterday in front of the Treasury Select Committee. His speech warned Brussels that the lack of a transition deal on Brexit negotiations will hurt the EU more than it will the UK. However, the sense of subdued optimism was quickly squashed as he also warned that Brexit could ìamplifyî four other dangers to the UK economy including the current account deficit, further weakness in Sterling, mounting consumer credit and a weaker commercial property market. With no economic data out of the UK today, markets will continue trading on news around Brexit.

Strengthening of the US dollar

Meanwhile, across the pond in the US, markets were keenly focussed on President elect Donald Trumpís press conference. His speech was mostly centred around healthcare and intelligence issues, and the only mention of note for financial markets was a hint at a proposed border tax on companies leaving the UK.

The Greenback continues to gain value as the Federal Reserve are forecasted to increase interest rates three times in 2017. Inflation is also predicted to pick up and give the economy a much-needed boost.

Wise Money markets await Fed speeches

The blip in US employment numbers released on Friday seems to have been overlooked by the markets as they now focus their attentions on further economic data. They include jobless claims, consumer confidence data and most notably, speeches by Fed Members Lockhart, Bullard, Harker and Kaplan. Meanwhile, from the Eurozone, we are expecting minutes from the European Central Bank meeting held in December.

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