GBP is weakening against EUR and JPY

Key releases, United States of America

USD is weakening against its main competitors – EUR, GBP, and the JPY.

Yesterday, USD strengthened due to the results of the Fed meeting. FOMC members did not take into account another attack by President Donald Trump and raised the rate from 2.25% to 2.50%. On the other hand, the forecast for the number of increases next year was reduced from three to two. In 2020 one rate increase is expected. The Fed also decreased forecasts for GDP growth for the current year from 3.1% to 3.0%, and for 2019 from 2.5% to 2.3%. During the press conference, Jerome Powell noted that the US economy has signs of slowing but the regulator does not see any fundamental changes. Today's decline in USD is due to the fact that investors fear the deterioration of the US economy, which is indicated by the inverse yield curve of US bonds.


EUR today is generally strengthening against the main competitors – USD, GBP and JPY.

As there is a lack of key EU economic releases, EUR is trading under the influence of American and British news. The currency is supported by fears of a slowdown in the US economy. The Fed has not yet considered such a possibility as a serious but the inverse yield curve for US bonds suggests otherwise. EUR is supported by the agreement of EU Commission and the Italian government on the budget issue. Brussels will approve of its deficit at the level of 2.04% and will not impose fines on Italy.

United Kingdom

GBP is weakening against EUR and JPY and is strengthening against USD.

GBP is under pressure of results of the meeting of the Bank of England. The interest rate, as expected, remained at 0.75%. However, officials stated that the uncertainty around Brexit continues to increase, which had a negative effect on financial markets. In addition, concern is caused by the fall in oil prices, which may affect the inflation negatively and cause it to fall below its target level of 2.0%. The Bank of England also decreased its forecast for GDP growth in the fourth quarter of this year from 0.3% to 0.2%.

Today’s November data on UK Retail Sales was strong but failed to support GBP significantly. The indicator grew by 1.4% MoM (instead of the expected 0.3% MoM) and by 3.6% YoY (instead of the expected 3.6% YoY). British citizens have significantly increased their purchases of household goods, and Black Friday sales also contributed to the growth of the indicator.


JPY is strengthening against USD and GBP but weakens against EUR.

Japanese investors are focused on today's meeting of the Bank of Japan. As expected, the regulator left the interest rate at –0.10%. Monetary policy also remained the same. The accompanying statement says that the regulator will keep low rates for a longer period. During the press conference, the Chairman of the Bank of Japan, Haruhiko Kuroda, noted that the impact of the US-China trade conflict on the Japanese economy had so far been limited. The risks of global trade instability remained but despite this, according to Kuroda, the Japanese economy would continue to grow. Also, the head of the regulator said that the Bank had the tools to further ease the policy if needed.


AUD today is weakening against EUR, strengthens against USD and moves horizontally against JPY and GBP.

Today’s data from the Australian labor market were ambiguous. The Unemployment Rate rose from 5.0% to 5.1%, and the Employment Rate increased from 32.8K to 37.0K. The negative point is that the growth occurred at the expense of citizens with part-time employment.


Today, oil quotes have resumed their decline.

The prices are under pressure of the EIA report, which recorded a decrease in oil reserves by 0.497 million barrels. It is significantly less than the 2.437 million barrels expected by the market. A soon resumption of production at the largest oil field in Libya, El Sharara, which has been idle since the beginning of the month due to the attack of insurgents, also has a negative effect on the quotations.

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