GBP recovered from six-week lows to bounce back above 1.18 against the EUR and 1.30 against the USD off the back of better than expected Construction PMI for January.
Positive U.S data continued with December Factory Orders comfortably beating expectations. This followed another positive day on Monday with Manufacturing data also beating expectations.
However, any expected recovery in the U.S. economy is expected to be delayed for some time due to the uncertainty surrounding the coronavirus in China.
Euro-Zone unemployment rate at 7.4% is the lowest recorded since July 2008, added to positive data in January for Germany it looks like the Euro should begin to perform stronger (aside from Brexit uncertainty).
Euro-Zone Retail Sales for December are set to beat expectations by 0.1% which continue to show positive signs for Europe.
Sterling will be nearly 4% stronger in a year than it is now, according to a poll of market strategists, based on expectations that Britain will secure a trade deal with the European Union this year despite its tough initial stance.
On Monday sterling took a pummelling after Prime Minister Boris Johnson set tough terms for the trade talks. Some of the forecasts in the poll were gathered before Johnson’s speech.
Britain left the EU on Friday and Johnson’s comments on Monday have rekindled fears of a cliff-edge – whereby no trade deal is agreed – at the end of an 11-month transition period which Johnson has repeatedly said he won’t ask to extend.
Foreign exchange strategists in polls have repeatedly said that leaving without a deal, and so trading on World Trade Organisation rules only, would be rough for the economy and the worst outcome for the pound.