Sterling closed out the week at the top spot thanks to the Bank of England holding off from cutting interest rates as expected a few weeks ago.
United Kingdom Headlines and Economic data
- Gross mortgage lending across the residential market in December 2019 was -1.1% y/y to £22.2 billion
- The Coronavirus story (China confirms 2,700 cases of virus, 40 counted elsewhere) was the major market driver for the week, pushing traders out of “riskier” assets into less riskier assets. For Sterling, this meant that it outperformed against the more “risk-on” currencies like the comdolls, while falling to the low-yielders / safe havens early and throughout the week.
- Britain hands in Brexit documents as its EU lawmakers say ‘au revoir’
- Annual U.K. house price growth edged up to 1.9%; 0.5% rise m/m
- EU parliament gives final approval to Brexit deal
- UK car production hits lowest level since 2010 on Brexit and diesel woes
- Bank of England opts against a rate cut but warns of slow growth after Brexit – this was the catalyst for the uniform move higher in the British pound on the week, taking it into the green against all majors despite the broad global risk aversion environment sparked by Coronavirus fears. Strong expectations were set a few weeks ago that a rate cut was a possibility, so it’s no surprise that traders took Sterling higher before and after the event.
- The move higher in Sterling seems to have been capped off in the afternoon U.S. session, possibly on more risk aversion sentiment after news that the Coronavirus declared global health emergency by WHO