IFX Market Report: Monday 18th November 2019

The pound was once again boosted by the Brexit Party on Friday as it chose to stand down candidates from over 40 seats that were not held by the Conservative Party. This was interpreted as making it much easier for them for Boris Johnson to gain a majority in the December 12th general election. The markets reacted well to the news, with the pound gaining 0.2% against the dollar, about a 1% gain for the week.

Most analysts have concluded that the pound will benefit from any news that makes it harder for the Labour Party to win this election. Some have also warned that the election may be distracting markets from the longer-term pessimism. The UK will still need to negotiate a trade deal with the EU in 2020 and more presently there was weaker retail sales data for October.

GBPUSD opened at 1.2874 and was stable for most of the day before jumping in the late afternoon to a high of 1.2911 and closing at 1.2898

GBPEUR opened at 1.1686 and moved less dramatically in the afternoon, reaching a high of 1.1693 and closing slightly lower than where it started at 1.1680

The dollar was lower on Friday afternoon as trade talk optimism once again boosted currencies with exposure to trade barriers. The US and China have continued to negotiate on Friday in order to reach an agreement on “phase one” of a trade deal and markets reacted well to the continued determination. US Commerce Secretary said a deal was likely but did not specify whether or not it would be before December 12th when tariffs on Chinese goods are set to go into effect.

The dollar fell 0.28% against the euro and 0.18% against the pound. The greenback also made some gains against its safe haven rivals, gaining 0.41% against the Japanese yen. Weak Chinese economic data should also boost hopes for Beijing’s desire to reach an agreement.

EURUSD opened at 1.1022 and climbed across the whole day, closing at 1.1045 but reaching a high of 1.1056.

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