GBP Weekly Review (Feb. 3 – 7)

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Early week clashes on Brexit sunk the pound in what was a mostly a quiet week of data and news from the United Kingdom.

Overlay of GBP Pairs: 1-Hour Forex Chart
Overlay of GBP Pairs: 1-Hour Forex Chart
GBP Weekly Performance from MarketMilk
GBP Weekly Performance from MarketMilk

United Kingdom Headlines and Economic data

Monday:

  • UK Manufacturing PMI at 50.0 in December (Flash: 49.8)
  • Boris Johnson says ‘no need’ for UK to follow EU rules on trade
  • Johnson and Barnier Clash Over Who Sets Rules for Brexit Trade
  • Johnson, Barnier trade blows over post-Brexit ties – the early week disagreements between the U.K. and EU increased the odds that no deal by December 31st is still a real possibility. Sterling dropped on the news with no slow down, despite the broad risk-on global sentiment (China’s PBOC cuts reverse repo rates) that is usually supportive of Sterling.

Tuesday:

  • Sterling continues its fall during the Asia session, then spikes higher, possibly on the continue positive global risk sentiment that accelerated after news of the first coronavirus drug candidate is set for testing in China.
  • UK Construction output falls at slowest pace since May 2019

Wednesday:

  • Rebound in new work underpins strongest growth of U.K. service sector activity since September 2018 – Sterling rallied on the news, but was not able to hold onto gains for long. There doesn’t seem to be a catalyst for the reversal back lower, so it may have been due to short-term profit taking or a return to the early week no-deal Brexit fears.

Friday:

  • U.K. House prices in January were 4.1% higher than in the same month a year earlier
  • Sterling turns lower during the U.S. trading session, and with no apparent direct catalysts, it could have been related to the broad reversal in global risk sentiment. Coronavirus related fears sent risk sentiment back to the negative on the Friday session  on news that 41 passengers on a cruise ship quarantined off Yokohama test positive for coronavirus, and concerns the outbreak will do much more economic damage to China than previously anticipated.

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