Sterling, arise!
By Peter Rosenstreich
With the likelihood of a ‘soft’ Brexit on the rise, the British pound jumped: in Friday trading, EUR/GBP fell to 0.8689 and GBP/USD rose to 1.3520.
Markets welcomed the news that the United Kingdom and the European Union have reached a preliminary agreement on the UK’s departure from the EU, including a resolution of the tricky border between Northern Ireland and the Irish Republic. Also settled are the general financial terms and the rights of EU citizens living in the UK and UK subjects living in the EU. Just as all hope seemed lost, a deal was agreed, which makes it hard for us to foresee anything other than a soft Brexit.
Jobs to boost USD
By Yann Quelenn
The dollar is strengthening ahead of today’s release of nonfarm payrolls – employment data for the USA. Markets expect job gains to total 200,000 in November. This will push the greenback higher, which already is trading at two-week highs against the euro. Meanwhile US equities have already started the famous Christmas Rally – which seems timid against Bitcoin’s fireworks.
Along with payrolls data, there also will be news on hourly wages growth, which might hint at inflationary pressure. Expectations are of 2.7% annually, up from 2.4%. We believe inflation is coming back to the US, and though the US Federal Reserve will raise rates next week, markets are still unsure about monetary policy next year. This might be the time to buy back the euro against the dollar on the expected dip this afternoon.