The pound gained further yesterday and overnight, touching 1.14 against the euro, as confidence that a no-deal Brexit could be avoided grew. Hopes that the UK would be able to leave with a deal helped the pound stay on track for its biggest weekly gain in 16 months. Some of the shine was taken off the home currency this morning however as sterling retraced in anticipation of Retail Sales numbers for December which fell 0.9% in the final month of last year. After a busy week in British politics the pound reached a two-month high on Thursday, moving to within a hair’s breadth of 1.30 against the dollar with markets calmed by the week’s events. Although the pound has retraced in early trade this morning, the up tick over the week is a clear sign that markets are less concerned over the prospect of leaving the EU empty handed.
The dollar was also set for its first weekly rise in more than a month, as doubts surfaced over whether major central banks will raise interest rates this year. The Federal Reserve isn’t expected to hike its rate this year, however with the likelihood of the ECB holding off on shifting its rates also diminishing following weak economic data, the single currency has been supressed, helping the dollar assert some authority.
Today’s key events
Retail sales figures from the UK this morning were the main focus the for the pound besides continued Brexit interest.
This afternoon, Canadian Inflation numbers will be released at 13:30 with the reading predicted to mirror that of the previous month.
Later in the afternoon, FOMC member, Williams, will make a speech before the Consumer Sentiment reading from the US is announced at 15:00.