British Pound Tumbles Amid Brexit Worries

Market Reviews

The US dollar remains under pressure after mixed data. Headline PCE was unchanged at 2.0% yoy in October versus consensus of 2.1%. Core PCE even slowed to 1.8% yoy, down from 2.0% yoy and missed consensus of 1.9% yoy. Personal income rose 0.5% while spending rose 0.6%. Both were above expectations. US initial jobless claims rose 10k to 234k in the week ended November 24, above expectation of 221k. Continuing claims rose 50k to 1.71M in the week ended November 17.

The euro remains firm today, together with Japanese yen and Australian dollar. Today’s data showed, that Eurozone business climate improved to 1.09 in November, beating expectation of 0.96. Eurozone economic confidence dropped to 109.5, down from 109.7 but beat expectation of 109.0. Industrial confidence rose to 3.4, up from 3.0 and beat expectation of 2.3. Services confidence was unchanged at 13.3, above expectation of 13.0. Consumer confidence was finalized at -3.9.

German CPI slowed to 2.3% yoy in November, down from 2.5% yoy but beat expectation of 2.2% yoy. German unemployment dropped -16k in November. Unemployment rate dropped 0.1% to 5.0% in October.

The British pound fell amid concerns about a vote in the British parliament on Brexit and after the Bank of England warned about the risks for the currency if Britain leaves the European Union without a deal. The pound is trading as the weakest one. Also, the dynamics of the pound was influenced by the statement of British Prime Minister Theresa May, who said that if she loses in parliament to approve her Brexit deal, then it will be necessary to prepare to leave the European Union without an agreement.

The Swiss franc is trading as the second weakest, weighed down by surprised GDP contraction. Swiss GDP unexpectedly contracted -0.2% qoq in Q3, much worse than expectation of 0.5% qoq expansion. It was also reported, that export of goods fell by 4.2%. Import of goods excluding valuables also dropped 2.4%.