Currency News Decmber 2017December proved to be a rollercoaster month in the currency markets, with Sterling enduring more ups and downs than everyone’s weighing scales this Christmas. From David Davis’s statement of intent remark, to the DUP’s eleventh hour rejection of Prime Minister May’s proposed agreement with the Irish government, each unexpected twist in the Brexit tale was met with a stern response from EU officials. Their willingness to take the UK to task over details of their EU exit will likely continue to be the main driver of Sterling movements in 2018.
UK SterlingBrexit talks continued to break up only to make up in December. When December 4th’s progress on divorce talks reached an impasse, the Pound to Euro exchange rate was available at 1.1393. As the first phase of Brexit negotiations on the Northern Irish border reached a breakthrough on Friday December 8th, Sterling made a short-lived comeback against the Euro, available at 1.1485 with CurrencyFair. By the following week, Sterling had lost ground against the Euro. The December 13th amendment to the European Withdrawal bill was a further blow to Theresa May’s position and did little to bolster the currency. The GBP/EUR exchange rate was then available at 1.135 on December 14th. In most GBP crosses this month, Brexit tensions kept Sterling on Santa’s naughty list. In the first half of December, Sterling had inched lower against the US Dollar, available at 1.3333 on December 9th before rallying to 1.343 by December 14th (with CurrencyFair). Sterling also hit a one-month low against the Australian Dollar. Having reached a 3-month best of 1.7925 on December 8th, GBP/AUD plummeted by 3% to a frosty 1.738 by December 15th with CurrencyFair. This again underscores Sterling’s ongoing vulnerability to political uncertainty.
US DollarAlthough US inflation failed to reach its 2% target, optimism surrounding President Donald Trump’s corporate tax overhaul heated up some USD crosses. USD/GBP had a good month rising from 0.7384 (December 2nd) to its December 15th best of 0.75 with CurrencyFair. Canadian Prime Minister Justin Trudeau expressed his concerns in December that the withdrawal of the US from NAFTA (North American Free Trade Agreement) would have a negative impact on businesses and individuals. Despite these political jitters, USD/CAD has continued to make a Christmas comeback this month, available at 1.2805 (December 19th) with CurrencyFair, having chilled to 1.263 on December 2nd.
EuroGiven the recent market influence of political events, the Catalonia election on December 21st will be worth keeping an eye on this week. If the pro-unity party wins this could reduce some of the risk surrounding the Euro of late. The Euro has experienced a pre-Christmas lift as it gained ground on both the US Dollar and Sterling. EUR/USD was available at 1.1798 and EUR/GBP was available at 0.883 as of December 19th. CurrencyFair will continue to provide you with news on the major market movements in 2018 and wish you and yours a Merry Christmas and a Happy New Year.
Important Dates for your diary:
- Wednesday December 20th – GBP Carney Speaks at Parliament Hearing in London.
- Thursday December 21st – CAD Consumer Price Index (YoY).
- Thursday December 21st – USD Gross Domestic Product Annualized.
- Friday December 21st – CAD Gross Domestic Product.