Foreign Exchange Daily Market Update 22/01/2018

Mon, January 22, 2018

Pound Needs Positive Catalyst to Reach Fresh Post-Brexit Highs.

Sterling reached a post-Brexit high against the dollar last week, but it may need better than expected data to help it maintain its rally.

The pound touched its highest level against the dollar since June 24, 2016 on Friday, helped by a weaker dollar.  As many expect even more gains on the pound. some analysts are being cautions as sterling strength doesn’t appear to be backed up by fundamentals.

U.K. wage inflation and fourth-quarter GDP data due this week could push BOE monetary policy expectations and help to secure sterling at its present levels. Many see the pound heading toward $1.50 by the end of the year but are surprised at the speed of its rise and may need another catalyst to push past $1.40.

Average weekly earnings are expected to remain steady for December from November, while GDP is expected to fall slightly for the fourth quarter. Should either of these data come much better, that could trigger further sterling strength.

In the short term the direction of the pound may also be driven by Brexit developments as a report Friday that the Labour party may seek to change the Brexit legislation in the House of Lords.

Sterling rose to 1.389 against the dollar this morning, the Pound increased to 1.133 against the Euro.

Data to look out today.   

Not much data due out today.

India will be shut today due to nation holiday.  

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