IFX Market Report: Monday 9th December 2019

The pound fell on Friday after three consecutive days of gains on the back of election optimism that the Conservative party will win a majority on December 12th. The pound fell 0.4% against the dollar but analysts have said it’s an insignificant move relative to what the pound has been doing recently and does not reflect a change in outlook. This morning the pound has continued its rally and has reached a seven-month high against the dollar.

A Conservative Party win on Thursday’s election would cause a bounce in the value of the pound but would be limited by what markets perceive to be the UK’s next challenges. By leaving the EU on the 31st of January the government will have one year to negotiate the ongoing trade arrangements or else a no-deal Brexit becomes a possibility again. In addition, economic data will begin to influence the pound more strongly once again.

GBPUSD opened at 1.3155 and lost across the day, hitting a low of 1.3105 before closing at 1.3124. This morning the paid reached 1.3180

GBPEUR opened near a low of 1.1813 and climbed steadily across the day, closing at a high of 1.1876

The dollar made gains on Friday thanks to data showing that the US economy created more jobs than expected in November, reinforcing the case that the Federal Reserve will keep interest rates on hold. The dollars gains remained modest as they were a brief respite from the ongoing trade negotiations which have dampened the outlook for the US, as well many other global economies.

The dollar index gained 0.3% in the afternoon but was still down 0.6% for the week. The dollar was up 0.1% against the Japanese yen but still ended with its worst weekly performance in nearly two months. The euro fell 0.4% against the dollar.

EURUSD opened at 1.1107 and fell sharply across the day, hitting a late afternoon low of 1.1048 and closing at 1.1051

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