Despite recent reports of poor Boxing Day high-street sales the Pound has come out fighting today, bolstered by two positive reports on the UK’s economy.
According to a study by the recruitment search engine Adzuna the average salary for vacancies online during the November period increased 1.2% over the same month the previous year; the first annual increase recorded by the company since 2015.
This news comes at somewhat of a contrast to another survey released on Wednesday from the Resolution Foundation, however, which predicted that real wages will still remain flat in 2018.
Nonetheless, Adzuna’s study is more tangible evidence of a rise occurring, rather than a forecast, hence investors deemed it significant enough to warrant buying into Sterling once again.
The second report was from the Confederation of British Industry (CBI), who reported that growth in production output in the three months to December accelerated.
Anna Leach, Head of Economic Intelligence shared her thoughts on the readings:
‘Private-sector firms are enjoying healthy activity levels as we approach the year end, but mediocre expectations for growth underline the ongoing challenges facing companies’.
Combined, this news left the Pound clawing back some of its recent losses against the majors.
Pound Euro (GBP EUR) Exchange Rate Up on BoE Outlook and Bloc Political Woes
The Pound Euro exchange rate climbed slightly on Thursday, with Adzuna’s new wage growth figures likely to reassure the Bank of England (BoE) that the UK’s economy will indeed be able to cope with November’s rate hike; evidence of pay growth is also liable to help push the bank towards further rate hikes in 2018.
The upward potential of the Euro, on the other hand, continues to be limited by a number of factors including the recent vote for pro-independence leadership in Catalonia and a new poll from YouGov that claims that almost half of the German public want Chancellor Angela Merkel to step down as Germany’s leader before the 2021 election.
The poll claimed that 47% surveyed did not want Merkel to serve the rest of her parliamentary term, with only 36% revealing support for Merkel into 2021.
Regardless of the findings of said poll Germany continues to suffer from the lack of an effective government months after the recent election, with Merkel’s Christian Democratic Union (CDU) now desperately attempting to win over old allies the Social Democratic Party (SDP).
Regardless, if this void is not quickly filled in the New Year then the Euro could come under further pressure.
Pound US Dollar (GBP USD) Continues Climb on Bearish ‘Greenback’
The Pound US Dollar extended its climb on Thursday, with the ‘Greenback’ seemingly destined to end 2017 with a bit of a dip.
A significant drop in long-term US bond yields seems to be the predominant cause of the Dollar’s recent decline, though a contraction in US consumer expectations in December may have also contributed.
US consumer confidence figures for December revealed a drop from 128.6 to 122.1, though this reading is still only slightly beneath the previous period’s 17-year high and, despite the decline, consumer expectations are still at historically high levels.
Markets will be looking to assess a run of domestic data releases for the US today which will include the advance goods trade balance, wholesale inventory figures, jobless claim readings and crude oil inventories.
The advance goods trade balance deficit is currently forecast to have shrunk in November, with an expected print of -$67.7b, down from the previous -$68.3b.
Whether this will be enough to swing things back into the US Dollar’s favour remains to be seen, however, with some investors still hesitant about the potential effects of the recent progress made towards US tax reform.
GBP CAD Claws Back Losses but Remains Limited by Crude Oil Surge
The Pound regained some ground against the ‘Loonie’ on Thursday as a result of the reports from Adzuna and the CBI, though the recent surge in crude oil prices prevented Sterling from fully capitalising.
The commodity-correlated Canadian Dollar continues to benefit from crude oil prices being at a 2.5-year high after the recent explosion of a pipeline in Libya.
Beyond this; surging copper prices also bolstered the demand for commodity-based currencies like the ‘Loonie’.
GBP AUD Rallies on Profit-Taking Ahead of US Data
The Pound rallied against the Australian Dollar on Thursday as investors took profits on the ‘Aussie’ Dollar ahead of a run of significant US data releases.
The Australian Dollar will, nonetheless, likely be finishing the year near a 2-year high, with the recent surge in commodity prices and an upbeat Reserve Bank of Australia (RBA) keeping the currency on good form.
Pound New Zealand Dollar (GBP NZD) Steady amid Thin Trading
The Pound New Zealand Dollar exchange rate remained steady on Thursday, with the two positive reports on the UK’s economy failing to send GBP NZD much higher.
Markets currently await the latest global dairy price index reading, due on the 2nd of January, for some semblance of guidance on the ‘Kiwi’ Dollar.
Beyond this, markets will be looking to see how the Reserve Bank of New Zealand (RBNZ) will handle its dual mandate in 2018.