Another Quiet Session in the Currency Markets

Xe Corporate Europe

November 26, 2019 3 min read

Another very quiet session for currencies, in what seems like Groundhog Day for almost a week now. The Pound is directionless. Seemingly well supported ahead of the U.K. General election but most certainly in the middle of its range at current 1.2880 levels. GBPEUR holds onto 1.1700 levels as do other significant cross pairs like GBPAUD, GBPNZD, GBPCAD etc....  So, the next move for both importers and exporters will be pivotal. And undoubtedly will be led by whether we see a clear Conservative majority, or a hung parliament. It has become that binary. And second-guessing recent polls has become a game of jeopardy. Keep a close eye tomorrow at 2200hrs when the Times Newspaper releases it is MRP YouGov poll. In the 2017 U.K. election this poll corrected predicted the hung parliament and statistically uses a multi regression analysis to predict outcomes.

Elsewhere King Dollar continues to reign, as talk in the Global Times hints at a nudge ever closer to a US China Trade Deal. The exact tariffs have not been finalised; but whisper it quietly - a deal seems more likely. The official announcement likely to be USD positive across the board. Worth bearing in mind for those with GBPUSD exposures. This currency pair is more at the mercy of market forces than other GBP crosses. And there is significant risk here for U.K. importers.

This afternoon it’s back to good old-fashioned US economics to determine future moves by the US Federal Reserve; Trade balance, Home sales and Consumer confidence numbers to drive USD sentiment. The Feds Brainard also speaks and hints at interest rate policy will be closely watched.

Overnight, it is worth paying attention to New Zealand where trade balance and RBNZ governor speeches will be eyed as the NZD attempts to stave off a poor run in 2019. In the Pacific region, the NZD has garnered more support from economic commentators than the beleaguered Aussie Dollar of late. With Gold also starting to come off its recent ascents as geopolitical risks ease, it is worth eyeing GBPAUD as a currency pair with the potential to benefit U.K. importers.

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