Good morning,

At 09:30 GMT we saw the release of UK November average weekly earnings grow from 3.1% to 3.2%. Whilst this could be considered marginal gains at best, given the pressure on UK economic data and how it will impact the Bank Of England decision-making model, you can see GBP pairs trading like a loaded spring.

For context, employment levels rose to 208k, which is the biggest three-month increase since January 2019 and sees the employment rate at a record high of 76.3%.

  • GBPUSD makes another break above 1.30 but runs out of steam at 1.3045.
  • GBPEUR gained to 1.1750, a very familiar range.

German ZEW expectations have continued to increase in recent months and, as a leading indicator in signalling sentiment reversal, the Eurozone is hungry for investor confidence. Emanuel Macron made peace with Trump yesterday evening, albeit via Twitter, and agreed on a truce on US / French tariffs until the end of this year. Tensions have been high since the digital tax levy was imposed by France on large US tech companies, which inevitably lead to retaliation and tariffs targeting the French agricultural sector. Trump signalled his satisfaction with this outcome with his signatory “excellent” tweet.

EURUSD is battling mid-December support levels with price stuck in a narrow range at 1.1096 – the general ECB position currently favours a weaker Euro, but Trump is pushing on with capping USD upside by applying continued pressure to the Federal Reserve. On top of this, they are adding additional Dollar liquidity to the market to encourage a rebound in Euro/Dollar. Growth forecast disparity between the two economies could lead to a Euro rebound.

Have a great day.

Author: Alistair Hutson, Private Dealing Manager


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