UK Government Faces No-Confidence Vote

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  • Australian Dollar Dips on Chinese Growth Warning – Weak consumer confidence also drags on AUD.
  • No-Confidence Vote to Bolster Sterling? – UK government widely expected to survive vote.
  • US Dollar Muted by Shutdown Concerns – Impact of government shutdown to prompt contraction at the start of 2019?
  • Euro Pressured by Draghi Comments – ECB President warns of the need for further monetary stimulus.

Australian Dollar Dented by Chinese Fears

The Australian Dollar fell back overnight on Wednesday, following another warning on Chinese growth, this time coming from Chinese Premier Li Keqiang who suggested China must prepare for difficulties this year. This added to pressure on AUD from earlier in the session following a sharp drop in consumer confidence.

The Australian Dollar may remain on the defensive throughout Thursday’s session as well, with Australia’s latest housing figures expected to report that house purchases slipped at the end of 2018.

Pound Steadies Following Brexit Vote

Following on from a historic defeat for the UK government as the House of Commons overwhelming rejected its Brexit deal, the Pound proved to be surprising stable on Wednesday, although this was due (in part) to markets bracing for an upcoming no-confidence vote in the government.

Markets widely expect that Theresa May’s government will survive the vote this morning however, which could give Sterling a lift on Thursday.

Dovish Draghi Comments Continue to Exert Pressure on Euro

The Euro was left on the defensive through Wednesday’s session as the single currency continued to feel the drag of some dovish comments from European Central Bank (ECB) President Mario Draghi. This saw Draghi suggest that recent economic developments have been disappointing and pointed to the need for further monetary stimulus amid global economic uncertainty.

EUR exchange rates are likely to remain on the back foot through Thursday as well, with the latest Eurozone CPI figures expected to confirm that inflation tumbled in December.

US Dollar Stalls on Shutdown Fears

The US Dollar was left range bound yesterday, with USD struggling to find support amid growing concerns over the impact of the ongoing US government shutdown. Recent White House figures suggest the shutdown has had a greater impact on growth than initially expected, and has prompted some speculation of a potential contraction in GDP in the first quarter.

These concerns over US growth may be made worse by the release of the latest US manufacturing index data, with another lacklustre Philadelphia index potentially dragging on the US Dollar.

Canadian Dollar Struggles to Find Own Momentum

The Canadian Dollar moved broadly higher yesterday, although this was largely on the back of the weakness of its peers rather than its own strength as oil prices stalled.

This trend may persist through today’s session as well, with the absence of any domestic data leaving CAD without any catalyst for movement.

New Zealand Dollar Slumps Following Chinese Growth Warning

The New Zealand Dollar moved in a similar range to the Australian Dollar on Wednesday, with the ‘Kiwi’ also slumping as China warned of increasing pressures on its domestic economy.

A lull in domestic data is likely to leave NZD exchange rates under pressure today, unless there is a notable upswing in market risk sentiment.

Data Released

January 17th 06:00 GBP Government No-Confidence Vote          
January 17th 11:00 AUD Home Loans (NOV)  -1.5%
January 17th 21:00 EUR Inflation Rate (DEC) 1.6%

Post by TorFX

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