Pound (GBP) Sees Biggest Rally In Nine Months!

25 Jan 2018

Published in: The Chamber Patron Group

Please find RationalFX's daily market report for today together with all the economic data/times for today's event(s):

Sterling rallied on Wednesday and is set for its biggest daily rise in more than nine months as strong British employment data and broad-based dollar weakness prompted investors to ramp up long positions in the currency.

In recent days, sterling has notched up a series of fresh highs since the vote to exit the EU in June 2016 sent the pound tumbling. The latest boost was provided by upbeat jobs data which dispelled fears the economy was struggling and fuelled some bets the central bank may raise interest rates more than once this year.

Brexit minister David Davis said on Wednesday that he expects Britain and the European Union will agree to a transition deal on exiting the bloc by the end of March.

With traders believing that the risks of a disorderly exit from the EU are receding, investors are looking for signs the Bank of England could hike interest rates more than the single raise this year that the market has currently priced.

Interest rate expectations moved up slightly after Wednesday's employment data, analysts said, given the BoE is watching for signs of pay growth before raising rates again.

The dollar fell to a fresh three-year low against a basket of major currencies on Wednesday after the U.S. Treasury secretary said he welcomed weakness in the currency, and as investors worried about U.S. President Donald Trump's protectionist agenda.

Speaking at the World Economic Forum in Davos on the eve of Trump's arrival at the Swiss resort, Treasury Secretary Steven Mnuchin said the weaker dollar was positive for U.S. trade. Mnuchin's comments provided a fresh trigger for selling after dollar bears were already emboldened by Trump's executive order imposing steep import tariffs on washing machines and solar panels, a move condemned by China and South Korea, analysts said.

Key Announcements

  • 12.45 - EUR - Minimum Bid Rate
  • 13.30 - EUR: ECB Press Conference

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