The main release from the US yesterday came in the form of Unemployment Claims which unexpectedly fell from 282K to 259K. This is the second consecutive release that has come in well below forecast and helped build support for the USD following the Fed announcement on Wednesday. Unfortunately for the USD this shift in sentiment was short lived as the greenback retreated off the back of geopolitical uncertainty. Tensions are increasing between the US and North Korea as Kim Jong-Un warns the US and their “deranged” President that they will pay for Donald Trump’s most recent threats. Following this statement, we have seen Asian Stocks rise and the USD retreat as markets take a risk-off approach to investment. Today will see only minor releases from the US as markets will be motivated by sentiment and global events. As a risk-off market continues to grow we could see the USD continue to fall into the close of the week, despite the hawkish rhetoric we have heard from the Fed this week.
With only minor releases from the UK yesterday there was little to motivate investors towards the pound as we saw a slight reversal of the gains seen on Wednesday following the latest positive retail sales. The main focus today will be centred on Theresa May who is due to speak in Florence regarding plans for Brexit. Following a period of uncertainty which has caused negotiations to stall it will be key for the Prime Minister to put forward a plan that will act as a catalyst for future talks. There has been rumours that May will put forward a plan that will see the UK pay 20 million Euro’s over the next 2 years, however, it is doubtful that the PM will commit to any specifics today, including a monetary figure. The rhetoric used by May will be key here and although much of what is stated will be very ambiguous she will likely put a soft Brexit plan on the agenda and markets could react favourably to the pound.