Once more unto the breach

The pound nestled around 1.38 against the USD, its highest trading level since the UK’s EU referendum.

On the economic front, this Friday’s retail sales data – a bellwether of the UK economy’s December performance – is the next data point that could have an impact on the sterling. Figures released yesterday showed a dip in inflation in December, indicating the impact of a falling pound on inflation calculations. This could signal the start of a retracement back towards the BoE’s 2% target.

The bleak mid-winter

The greenback stands bruised after its fifth-consecutive day of losses. In the short term, the markets need to see an expedient funding measure for the US government. We think that any government shutdown would be dollar negative and could push its price out further.

Loonie tunes to rate hike

USDCAD was trading flat before today’s monetary policy announcement, where the BoC increased the key interest rate to 1.25%. We will likely see some CAD strength later today, especially if the sentiment regarding future hikes is hawkish.

Crypto watch

Bitcoin records its biggest ever daily loss, dipping below the $10,000 mark and wiping off close to 50% of its peak 2016 value. This has created widespread fear across the crypto world, leading to major losses for other cryptocurrencies as well.

– Christopher Morriss, The WorldFirst Team