Good morning, in today’s report:
· Sterling was the notable outperformer last week
· Emerging Market currencies saw significant losses as heightened global volatility is expected
· This week, we watch for BoE Carney’s speech (Tue), UK employment data (Wed) and UK Retail Sales (Thu)
· The Pound recorded its biggest two-week rise in eight years against a basket of major currencies after Donald Trump’s presidential victory and the previous week’s High Court Brexit ruling prompted traders to reassess their bets against sterling
o The 4% jump in Sterling’s trade-weighted index, measuring the value of the Pound against several currencies including the Dollar, Euro and Yen, cemented the currency’s best fortnightly performance since 2008
o It came as the Euro headed for its worst week against the pound since July 2015 as Mr Trump’s win raised investor concern over populist outcomes in upcoming European referenda and elections, including next month’s Italian constitutional referendum
o On Friday last week GBPUSD was above 1.2600 for the first time since early October, however this morning we have seen retracement back below 1.2500. EURGBP is near a 2-month low, touching 0.8580 before retracing back above 0.8600 this morning
· Flight from EM currencies was another theme that materialised at the end of last week, with MXN losing over 8% in three days against the USD and the ZAR and BRL falling about 5%
o INR fell too but the depreciation was partially stemmed by local news that the BoI had introduced measures to crack down on corruption and the black economy, which should help reduce inflation, increase tax compliance and investment
· This week, BoE Governor Carney speaks at the Treasury Select Committee on Tuesday on the November Inflation Report and there will likely be some discussion of the Bank’s Agents’ Report
What to Watch for Today and the Week Ahead
· In a quiet start to the week, this morning the key release is from the euro area, with Industrial production for September being watched (Barclays Research: -1.0% m/m)
· On Wednesday we look to the UK employment report as well as US IP. On Thursday, we watch for UK retail sales, euro area inflation and US inflation and housing data. Whilst on Friday, attention turns to comments from ECB president Draghi at his speech at the Euro Finance Week.
Regards All Users!