Headlines continue to dictate markets
Tuesday 21 May, 2019
Daily Currency UpdateGBP - British PoundThe big story yesterday came from the US as trade tensions took escalated once again. Google, Intel and Qualcomm have all decided to toe the line and freeze their cooperation with Chinese telecommunication company Huawei. This follows a decision by the Trump administration to blacklist the Chinese company which has become a proxy for the trade war and it looks like the tensions have spilled into a tech cold war. In the UK the focus for the Prime Minister returns to her cabinet who she is set to meet today in order to drum up more support for her Brexit deal but this is wishful thinking for Theresa May who looks like she is flogging a dead horse. The time of collective cabinet responsibility is over. For the pound the continued political uncertainty is acting like a sea anchor. GBP/EUR dropped to below 1.14 for the first time since February with GBP/USD dropping to levels not seen since January.
Key MoversOvernight two items caught investors eyes. First of all, Jerome Powell, head of the Federal Reserve spoke reiterating that the outcome of the current trade war was uncertain and he wouldn't therefore be drawn into a decision yet on interest rates. The market though has different thoughts and is pricing in an interest rate cut for the end of the year. Secondly, the Chinese central bank, the PBOC, has jumped into the market once again having been called to action by the trade war as they injected a further 80 billion yuan into the market.
- GBP/USD: 1.2650 - 1.2780 ▼
- GBP/EUR: 1.1325 - 1.1435 ▼
- GBP/AUD: 1.8380 - 1.8500 ▲
- GBP/NZD: 1.9460 - 1.9540 ▲
- GBP/CAD: 1.7040 - 1.7140 ▼