Market insights

Good morning,

The GBP/EUR rate remains unchanged today. Off the recent highs but still towards the top of the longer term range. As mentioned in yesterdays comment there's unlikely to be a big move before the major news out tomorrow unless there is a geopolitical piece of news out such as fallout from the Sue Gray report.

So today feels a bit like Christmas Eve....lots of build up and anticipation ahead of tomorrow. However, much like Christmas, tomorrow could turn out to be more hard work than joy. Because the UK potential rate hike has been talked about for well over a month the anticipated 0.25% rise to 0.5% is very much priced in. Any variation to that number could cause a big move. Less than a 0.25% increase expect the Pound to drop and more than 0.25% increase expect the Pound to break out. The other point to note is the vote count from the Monetary Policy Committee. 8 are expected to vote in favour of a hike and 1 to keep rates the same. Any different to that could also have an effect.

However it's not just the UK that's announcing it's interest rate. The European Central Bank puts theirs out 45 minutes later. Anyone nervous of the markets should switch their screen off tomorrow.

Today there is a bit of data that could mix things up a bit. The Eurozone has it's preliminary inflation numbers out later followed by employment data in the States and the Bank of Canadas Chairman given a speech later in the evening.

Anyone interested in the GBP/CAD rate should keep an eye out on this.

Sterling continues to show short term strength versus the Greenback but it's the Swedish Krona that's the most interesting. It's currently gaining strength versus the Euro and the Pound. Here at Regency FX we have been helping a number of Swedish clients repatriate to Spain and France as their housing market has been even hotter than the UK's in the last 12 months.

As an aside China continues to celebrate their New Year today so the Yuan remains in descent.

As ever we look forward to keeping you in the loop and look out for our next update.

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Today’s Economic Calendar

EUR: 11:00 Preliminary Inflation Data

US: 14:15 ADP Employment Change

CAN: 21:00 Bank of Canadas Governor Macklams Speech

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