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RationalFX : Sterling Strengthens As Javid Resigns

RationalFX : The pound had a strong showing on Thursday as Chancellor Sajid Javid resigned and investors positioned for a higher-spending budget under a new finance minister…..

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GBP

It was a well-known secret that Javid was cautious when it came to fiscal policy, and this was the apparent root of tension between Number 10 and the Chancellorship. His successor, Rishi Sunak, is expected to far more aligned with the Prime Minister  and market investors are now expecting a more expansionary budget, lessening the chances of the Bank of England needing to intervene. Expectations of more fiscal stimulus mean money markets are likely to cut back on the likelihood of a Bank of England Interest rate cut at the next meeting.

EUR

The Euro suffered yesterday as investors sought out U.S. assets due to new cases of the coronavirus outbreak. Europe has particularly strong trade links to Asia, and growth will continue to be hampered whilst this key link is damaged. Germany in particular has been affected by this, and the latest Gross Domestic Product reading for Q4 is reflective of this, with 0% growth being reported, worse than the expected 0.1%.

Key Announcements

10:00 – EUR – Gross Domestic Product (QoQ) (Q4); expected to remain at 0.1%

10:00 – EUR – Gross Domestic Product (YoY) (Q4); expected to remain at 1%

13:30 – USD – Retail Sales (Jan); expected to fall to 0.3% from previous 0.5%

15:00 – USD – Michigan Consumer Sentiment Index (Feb); expected to fall to 99.5 from previous 99.8

Source : ETFWorld.co.uk

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