Daily FX Update – 18th January 2017

“I want, I will” are all very well and good when you’re delivering a speech, but getting what you WANT from the other side is quite a different story. Warm words about our relationship with Europe will mean nothing if she doesn’t get what she wants. The question still remains, what happens if that’s the case?

GBP rallied strongly, liking the fact that the final vote will go to both the House of Commons and the House of Lords. Single biggest one day rise since 1998. It was also buoyed by inflation coming in at 1.6%, above the 1.4% forecast, signalling the 2.0% target may come round sooner rather than later. This will be a dilemma for UK PLC where the inflation vs growth argument is likely to arise. 

USD slid in the afternoon on Dudley comments that a strong Dollar may put downward pressure on prices which will hinder growth, which cemented Trump’s earlier comments to the Wall Street Journal. The long Dollar trade whilst overcrowded of late, still has room to run, although with Trump’s inauguration at the end of the week, volatility is certainly likely in the short term.  

A big day ahead in terms of data, starting with UK employment and average earnings numbers at 9.30. UK data has been positive of late and coupled with yesterday’s momentum, a good number could see buyers take control once more. Theresa May will also face questions in parliament today following yesterday’s speech. We also have EU inflation numbers this morning followed by US CPI and manufacturing output to round us off. 

Have a good day. 

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