Neither the pound nor the euro was in a good place this Friday, both currencies continuing to shed value against the dollar.
There are myriad reasons for the current forex landscape. The greenback is benefiting from the (gradual) progress of Donald Trump’s tax plans, alongside the relative certainty of a December rate hike from the Federal Reserve. This meant the currency was ready to pounce on the pound and the euro after both were softened up on Thursday.
Sterling’s problems can arguably be traced back to yesterday’s retail sales survey from the CBI, which showed that, in October, high street sales plunged at their fastest rate since 2009 (i.e. the peak of the recession). That wiped out all of cable’s post-UK Q3 GDP reading gains on Thursday, and has sent the pound another half a percent lower this Friday, the currency now desperately trying to keep its head above $1.31.
As for the euro, its losses stem from Thursday’s ECB meeting. Mario Draghi made sure that the central bank’s latest QE taper – cutting the monthly bond buying programme in half to €30 billion – was still read as dovish by stating the timeframe for stimulus was ‘open-ended’. This sent the euro to a 3 week nadir against the dollar, a low that has been further exacerbated by this morning’s 0.3% fall.
Overall the pound seems to be having the worse time of it, not only dropping against the greenback but shedding 0.2% against the euro (admittedly having risen towards €1.13 on Thursday). This meant the FTSE was able to cross 7500 after the bell, having fallen as low as 7425 following Wednesday’s GDP reading.
The DAX, meanwhile, finds itself at a fresh all-time high, surging past 13200 with a half a percent rise; so too the CAC, which rose 0.6% to hit a record peak of 5480. Of the eurozone indices only the Spanish IBEX fell this Friday, and even that has to be put in the context of Thursday’s 2% surge.
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