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Published on 20 Jan 2017
The
past week has been a good one for the British Pound, which climbed on
UK Prime Minister Theresa May’s Brexit speech and then held steady.
Despite earlier market concerns about a “hard Brexit” – which is
precisely what’s likely to happen – the end of uncertainty gave the UK
currency a boost.
That sent the FTSE 100 index of leading London-listed shares lower. They backed off after their recent record run of record highs as the inverse correlation between GBPUSD and the FTSE 100 remained firmly in place.
Elsewhere, EURUSD rose modestly even though European Central Bank President Mario Draghi said he saw Euro-Zone interest rates at their current or lower levels for an extended period of time.
As for the week ahead, that’s likely to be dominated by any policy announcements from the new US President Donald Trump. If he carries out the plans to boost spending and cut taxes that he talked of in his election campaign, that’s likely to provoke a response from the Federal Reserve.
It’s expected to increase US interest rates this year and Fed chair Janet Yellen has made two major speeches in the past week which were widely seen as “hawkish”. So if US rates rise while rates in the Euro-Zone and the UK remain low, that could well lead to a stronger Dollar against currencies like the Euro and the Pound.
In the UK, the big event is the Supreme Court ruling on Brexit. It’s likely to rule that Parliamentary approval is needed to formally invoke Article 50 that will begin the divorce proceedings between Britain and the EU.
That sent the FTSE 100 index of leading London-listed shares lower. They backed off after their recent record run of record highs as the inverse correlation between GBPUSD and the FTSE 100 remained firmly in place.
Elsewhere, EURUSD rose modestly even though European Central Bank President Mario Draghi said he saw Euro-Zone interest rates at their current or lower levels for an extended period of time.
As for the week ahead, that’s likely to be dominated by any policy announcements from the new US President Donald Trump. If he carries out the plans to boost spending and cut taxes that he talked of in his election campaign, that’s likely to provoke a response from the Federal Reserve.
It’s expected to increase US interest rates this year and Fed chair Janet Yellen has made two major speeches in the past week which were widely seen as “hawkish”. So if US rates rise while rates in the Euro-Zone and the UK remain low, that could well lead to a stronger Dollar against currencies like the Euro and the Pound.
In the UK, the big event is the Supreme Court ruling on Brexit. It’s likely to rule that Parliamentary approval is needed to formally invoke Article 50 that will begin the divorce proceedings between Britain and the EU.
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