The Pound (GBP) was able to stabilise against some of its peers on Thursday after initially surging thanks to hawkish comments from Bank of England (BoE) policymaker Ian McCafferty.
Sterling sentiment was bolstered by McCafferty’s suggestion that the BoE should begin discussing the possibility of unwinding its quantitative easing programme, whilst also signalling that he would again vote for a rate hike in the next Monetary Policy Committee meeting.
However the Pound did face some pressure following the latest Office for Budget Responsibility (OBR) report on government finances, which warned that the UK’s financial stability was at risk unless the government manages to make a success of Brexit.
The Pound Euro (GBP EUR) exchange rate continued to hold steady overnight on Thursday as Sterling sentiment remained high following the comments from McCafferty.
However the single currency found some strength this morning thanks to the Eurozone’s latest Trade Balance which showed that the bloc’s trade surplus jumped from €17.9bn to €21.4bn in May, although some investors are likely to remain concerned that Germany’s continued dominance in trade could unbalance the Eurozone.
Sterling reached a new weekly high against the US Dollar (USD) earlier this morning as the US currency was weakened by dovish remarks from Federal Reserve Chair Janet Yellen.
Some analysts are now beginning to rule out another rate hike from the Fed this year as Yellen’s dovish outlook on inflation indicated that the bank is not confident enough that the US economy is strong enough to continue raising rates at the accelerated pace seen over the twelve months.
Yellen will likely be vindicated later this afternoon with the release of the latest US inflation figures which are expected to show that inflation slipped from 1.9% to 1.7% in June.
The Pound Canadian Dollar (GBP CAD) exchange rate managed to rally from a four-month low on Thursday as the pairing was strengthened by both the comments by McCafferty and a drop in oil prices on concerns of a growing global supply glut.
Sterling failed to advance against the Australian Dollar (AUD) again on Thursday, with the pairing slumping to a new two-week low as the ‘Aussie’ was bolstered by yet another jump in iron ore prices.
New Zealand Dollar
The Pound New Zealand Dollar (GBP NZD) exchange rate also struggled on Thursday with concerns over the OBR’s latest stability report weighing on Sterling sentiment.
You can get in touch with TorFx via email here or via the contact page.