Sterling (GBP) Exchange Rates Hold Steady on Quiet Data Day – UK Statement in the Spotlight
Pound (GBP) exchange rates stabilised on Monday, trading narrowly against most of the majors as markets awaited tomorrow’s Spring Statement from UK Chancellor Philip Hammond – an updated economic and fiscal outlook.
No significant changes are expected to the statement, and it is only scheduled to last some 20 minutes – a mere fraction of the time that the autumn budget statement usually takes.
The accompanying Office of Budgetary Responsibility (ORB) forecasts, however, could have a notable effect on the Pound’s trajectory, with any alteration liable to influence growth outlook and Sterling’s performance.
The OBR has previously been rather pessimistic, undershooting forecasts and leading some analysts to expect the group to revise its forecasts upward on Tuesday.
GBP/EUR Exchange Rate Trades within a Narrow Band – Eurozone Inflation Readings on the Horizon
Lacking much in the form of pertinent data releases the Pound Euro (GBP/EUR) exchange rate spent Monday morning trading within a narrow band.
The Euro spent the end of last week fluctuating as European Central Bank (ECB) President Mario Draghi downplayed the bank’s decision to remove its easing bias from the accompanying statement – a decision that dulled hopes the bank was on the cusp of normalising monetary policy.
Beyond this, Draghi pointed out that the bank intends to continue with its quantitative easing measures until September this year and beyond, if necessary.
This week, the market focus will shift to the US consumer price inflation readings, due on Tuesday, and the bloc’s own inflation readings, due on Friday.
A robust performance from the ‘Greenback’ could severely limit the upward potential of the Euro, particularly with markets expecting the US Federal Reserve to move hawkishly this month.
Trump Tariffs and US Inflation – What can we Expect for the GBP/USD Exchange Rate?
The Pound US Dollar (GBP/USD) exchange rate crawled slightly higher on Monday, though this could quickly change depending on the performance of tomorrow’s US inflation readings.
Economists are currently expecting a small rise in the yearly consumer price index reading for February, although the monthly reading is expected to decelerate.
Overall, optimism about the state of the US economy is currently on the upsurge, with data last week revealing a massive 313,000 jobs added in February.
It should be noted, however, that US average hourly earnings growth proved underwhelming last week, news that diminished the likelihood of there being four rate hikes this year.
A notable drop in consumer prices could also completely eliminate this prospect.
US President Donald Trump’s tariff measures will likely be discussed this week, with markets waiting to see how Beijing and Brussels will respond to the tariffs being enacted.
Both nations have threatened retaliatory measures, but the fact that they already have massive trade surpluses with the US should push them away from a move that might spark an outright trade war.
GBP/CAD Exchange Rate Trades Higher as Canada’s Job Market Disappoints
The Pound Canadian Dollar (GBP/CAD) exchange rate traded higher on Monday as markets digested last week’s slightly disappointing Canadian employment figures.
Canada’s job market added some 15,000 jobs in February, enough to knock the unemployment rate down to 5.8% but still below the amount that was expected.
It also came after the previous month’s loss of 88,000 positions and did little to negate the fact that full-time jobs actually declined in February for the first time in six months (by a notable 40,000).
Private-sector job gains are necessary in the maintenance of economic growth, but with only 8,000 added during the last month the outlook grew slightly gloomier.
GBP/AUD Exchange Rate Holds Steady as Trump Grants Australia Exemption from Tariff Measures
Sterling Australian Dollar (GBP/AUD) traded narrowly this morning, with the Trump administration’s rumoured decision to grant Australia exemption from US steel and aluminium tariffs giving the ‘Aussie’ Dollar a much needed boost.
This decision was perhaps assisted by the fact that Australia runs a trade deficit with the US.
Looking ahead, comments from the Reserve Bank of Australia (RBA) will be the focus this week, with RBA Assistant Governor Christopher Kent and Deputy Governor Guy Debelle due to speak on Tuesday and Thursday respectively.
Analysts will be looking to carefully scrutinise their comments in an attempt to ascertain whether the bank’s outlook has shifted – particularly after RBA Governor Philip Lowe sounded unexpectedly upbeat during his last speech.
GBP/NZD Exchange Rate Slips as Risk Appetite Rises
The Pound New Zealand Dollar (GBP/NZD) exchange rate slipped on Monday, struggling as the riskier currencies found support on news that President Trump is due to meet with North Korean leader Kim Jong Un to discuss denuclearisation.
This meeting is unprecedented, being the first time a sitting US President has met with a North Korean leader. Furthermore the press is currently reporting that Kim Jong Un is seeking a peace treaty.
If this is achieved then risk appetite could soar, potentially giving further support to commodity currencies like the ‘Kiwi’ Dollar.