IFX Market Report: Monday 13th January 2020

The pound fell slightly on Friday as another Bank of England policymaker echoed Governor Mark Carney’s comments about the possible need for stimulus in the light of persistently poor economic data releases. The pound fell 0.1% against the dollar but analysts feel that any action the bank takes will not come until there has been some clarity on the effects that this new government will have on the economy.

Markets did not react to the passing of legislation that meant the UK will finally leave the EU on the 31st of January. Though there was positive data from a survey of recruiters on Friday, most analysts say the pound is being weighed down by the uncertainty of Brexit negotiations for a future trade deal. Sterling is still expected to rise to $1.32 at the end of January and at least 3% across the year.

GBPUSD opened at 1.3058 and rose to a high of 1.3088 before falling back down to a low of 1.3052 shortly before closing

GBPEUR opened at 1.1757 and performed similarly, reaching a high of 1.1792 but closed at 1.1747

The dollar fell from its four-week highs against the Japanese yen and Swiss franc on Friday as the possibility of further tensions between the US and Iran decreased risk appetite. Weak payroll data released on Friday showed new jobs increased by less than expected added to pressure on the dollar. Though this was seen as insufficient to tempt the Federal Reserve towards a different policy from their currently “neutral” stance.

The dollar index fell 0.1% though this was the strongest week for the index in the last two months. The US government appears to still be taking a hard line against Iran accusing them of intending to kill US soldiers in return for the killing of Iranian military commander Qassem Soleimani. It is unclear what might come of this but the demand for riskier assets will remain lower until there is further clarity.

EURUSD opened at 1.1106 and reached a late morning low of 1.1088 before picking up in the afternoon to close near a high of 1.1128

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