For all those affected by this currency pair the tendency is to focus on GBP and its changing daily/hourly strength or weakness due to the torrid action in Westminster. As perceptions that a NoDeal is out of the picture, GBP strengthens and then as news emerges that PM May and Leader of the Opposition Corbyn find no common ground other than their well recorded mutual antipathy, GBP weakens. Volatility in a narrow range as reported here last week. Outside in the wider world USD currency traders, Chicago Mercantile Exchange Futures traders and the market community that tracks the EUR see no reason to buy the EUR at present: Germany economic releases reflect a weak and a further weakening position; Eurozone growth is flat; French unemployment is high and not shifting downwards etc etc etc. Net short EUR trades on the Chicago Mercantile Exchange increased last week by $2.6billion and now total EUR positions stand at $13.9 billion short. While this is a small part of the $5 trillion per day global foreign exchange market, it is nevertheless representative of overall market sentiment: there is no good reason to buy EUR at the moment. In summary that means that despite the Brexit negotiations’ negativity of Westminster and Brussels, GBP is insulated from much larger dips by the ongoing greater negativity for EUR…..for the moment.
Brown Shoes in The City of London: Brown in Town.
Hard on the heels of the news that Goldman Sachs no longer requires Masters of the Universe and in fact all staff to wear suits, comes the news that a City Law firm partner told the audience to avoid brown shoes with a blue suit. Quite takes me back in time to 1992 when one of my colleagues had rashly cut a dash by wearing a tie, blazer, dark grey trousers and brown shoes for the morning Executive Directors’ Meeting. Looking him up and down my then Investment Bank CEO with a raised eyebrow, said: “ Good of you to come in while you are on holiday.”
Discussion and Analysis by Humphrey Percy, Chairman and Founder
Data Day Despite salient data already having been published in China and France so far this morning, we are far from finished with the deluge of data due to reach the market today. The most important of which will be those that we have signposted in earlier briefings: Eurozone and US inflation figures. Given just […]
Eurozone That was a surprise: yesterday the EU announced that inflation had fallen to 2.4% which was considerably better than the 2.7% that markets had expected. Despite the ECB saying it was far too early to cut rates, the market has pencilled in the first cut for April. Before getting carried away it should be […]
UK Labour market The Bank of England yesterday broke cover to drive the message home that due to the UK’s labour market remaining tight, it was premature to start talking interest rate cuts and it was not just Governor Bailey who was calling for higher for longer interest rates but also his MEPC colleague Jonathan […]