Cable extended its losses on Tuesday as the US Dollar “continues to benefit from the reselection of Jay Powell as US Federal Reserve Chair”. The reason Powell’s appointment is Dollar positive is because it “could well mean a faster withdrawal of US monetary stimulus and several US interest rate increases next year”. Sterling on the other hand is struggling to gain momentum as the prospect of a UK interest rate hike on 16th December is already “fully priced into the markets”. Because of this, if a rate hike in confirmed then there will be “little upside” to be had for Cable, but if a hike is not announced Sterling will suffer substantially.
GBPUSD has slipped from the 1.34 handle and started Tuesday at 1.3378. Despite a hard session, Cable was able to close above where it opened, finishing the day at 1.3385.
GBPEUR was also able to catch some upside yesterday, opening the day at 1.1873 and closing at 1.1883.
EURUSD again traded in a tight range on Tuesday, with the pair still pressed by a stronger US Dollar. The pair opened at 1.1267 and closed at 1.1264.
On the data front yesterday, the UK, US, Eurozone, and Germany all released their latest PMI data yesterday. Germany kicked off the day at 08:30 with Composite Flash PMI coming in 1.8 over forecast, printing a final figure of 52.8. German Manufacturing PMI also beat expectations, coming in at 53.4. The Eurozone as whole printed a Composite Flash number of 55.8, and the Manufacturing PMI came in at 58.6. The UK readings came out at 09:30. November’s Composite Flash PMI printed a final figure of 57.7 despite being forecasted at 56.9, and Manufacturing PMI also beat expectations by 0.9 coming in at 58.2. UK Services PMI was forecasted at 58.5 but printed an actual figure of 58.6. The US Markit Manufacturing PMI came out at 14:45, giving a final reading of 59.1.