Daily FX Update – 16th January 2017
So Brexit is firmly back in the headlines as the press suggested that Theresa May is likely to signal at a speech she’s due to deliver on Tuesday that the exit strategy is likely to be “hard” with the UK likely to leave the Single Market unless Brussels provides strong concessions. This saw GBPUSD break below 1.2000, a drop of over 1% from Friday’s close; and as we come in to this morning, the price currently pivots this important psychological level. The news also saw GBPEUR drop in to 1.1300 territory (EURGBP above 0.8800 for the first time since November.) It’s a big week for the Pound with UK CPI, retail sales and employment numbers all on the docket so price action will be pivotal for short term direction. As we draw closer to the Article 50 trigger date, Brexit is likely to be the dominant factor for Sterling’s fate but as we draw even closer, it does seem a hard Brexit will be the outcome.
It’s a huge week in general with the inauguration of Donald Trump at the end of the week. He set out clues of his potential foreign policy and wasn’t scared to highlight that Brexit was a good thing for the UK as it would allow us to slip away from German claws. The presidency will certainly be interesting if nothing else and the first month or two are likely to be very volatile.
The data calendar is light today and as mentioned, key focus will centre on UK numbers and the presidential inauguration but we also have the ECB rate decision and more importantly the accompanying press conference to digest.
Have a great week.