GBP sold off yesterday in an orderly fashion as participants took pause ahead of Christmas holidays. After spiking above the $1.34 handle in early London dealing, the pound fell back into the $1.33s and overnight has retreated into the $1.32 figure. While last week’s election is a great positive for the currency’s outlook, it’s more than understandable why investors are taking risk off the table after what has been an 11+ cent move since the end of October. The same analysis applies to the GBPEUR pair which now finds itself trading in the €1.18 handle.
Today hosts another employment report from the UK economy, representative of November’s activity. Recent reports have shown the potential for further weakness in the domestic labour market. Wage growth has started to wane while more people are claiming benefit. The report is released at 0930 and could impact the pound.
Elsewhere, the US will see building permits, housing starts, industrial/manufacturing products and JOLTS job openings. An active afternoon for the greenback which could inspire some volatility.
Written by Viv Savani. 8:44am, December 17th 2019
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