Good morning,

USD – Shutdown pressures yield to trade war influence

The dollar has started the year on the front foot, mainly courtesy of lingering global fears over the state of wider stock markets and the impact that trade wars and dislocations will have on the economic outlook.

Evidence overnight that the Chinese economy is slowing was released overnight with both official and private measures of manufacturer sentiment falling to the lowest in a couple of years. Similarly, we are seeing weakness in other trade and manufacturing hubs such as Thailand, Malaysia and Indonesia.

With Donald Trump still in the White House, the dollar is never far from political influence. Over the Christmas period Trump continued his battle with the Federal Reserve with reports surfacing that the President had discussed firing Fed Chairman Jerome Powell, a move that markets would look at with severe disapproval.

The US government also currently remains in ‘shutdown’. Parts of the US government have been closed for 11 days now and a meeting between Trump and congressional leaders is scheduled for today. Trump has shut down the government following failed attempts to secure funding for his border wall between the US and Mexico.

Our 2019 outlooks pieces are now live on our blog and you can see what we and other forecasters think the next 12 months will hold for the USD here.

GBP – 2019 begins next Monday

Sterling has had Christmas off with the rest likely to run until next week; parliament returns on Monday and until that there is little impetus for sterling to break out of the range that it has been stuck in since Brexit started to fall apart in November/December.

The deadline on Theresa May’s deal remains the week commencing January 14th and from that we will see the deal passed and a final vote on the EU Withdrawal Bill with the UK leaving the EU on March 29th, or anything from an election, 2nd referendum or a push towards a no-deal Brexit.
Much like the Asian economies listed above that have released local manufacturing sentiment overnight, the UK’s version is due at 09.30. The expectation remains however that a lack of Brexit certainty will be weighing heavily on the minds of those working in manufacturing and exporting.

You can see what we think 2019 holds for the pound here.

What does 2019 hold?

As we have noted above, our forecasts and predictions of 19 currencies that WorldFirst clients trade, hold, spend and earn are now live on our blog. Whether you spend South African rand, earn Australian dollars or want the Swedish krona to fall in value we have taken a look at what the next 12 months could hold.

The full list and all of our thoughts are available at

For now, welcome back and have a great day

Jeremy Thomson-Cook, Chief Economist and Head of Currency Strategy