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Pound Rallies on Higher Hopes of BoE Rate Hike

Categories: AUD, CAD, EUR, GBP, Markets, News, NZD, USD
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Pound Sterling (GBP)



GBP/USD 1 Week Chart

The Pound has been resilient today, making moderate gains against the Euro and US Dollar despite concerns about the UK budget delivery in late November.

The Institute for Fiscal Studies has sounded the alarm, warning that Chancellor Philip Hammond might have to drop his plans of reaching a budget balance.

Pound traders have partly ignored these warnings, focusing more on the chances of a Bank of England (BoE) interest rate decision on Thursday.

A number of economists predict an interest rate hike from 0.25% to 0.50% on November 2nd. If this takes place the Pound could rally against its currency peers.

 

Euro (EUR)

A set of forecast-beating confidence statistics have allowed the Euro to rise against the US Dollar and most rivals, bar the stronger Pound.

All of October’s confidence measures have shown growth and have additionally exceeded forecasts.

While the Euro is currently in a strong position, it could soon decline if German inflation slows in October. During the month, forecasts are for a minor slowdown from 1.8% to 1.7%.

 

US Dollar (USD)

The US Dollar has fallen against its key currency rivals today, posting losses against the Euro and Pound.

While USD has risen elsewhere, it has remained unsettled because of updates in the investigation into Russian actions in the 2016 Presidential Election.

According to reports from CNN and Reuters, among others, the team investigating Russian links is ready to press charges.

President Donald Trump has furiously denounced this as a ‘witch hunt’, but the danger of some of his officials being arrested remains a clear threat.

The US Dollar could turn highly volatile on Wednesday afternoon, when the Federal Reserve makes its November interest rate decision.

The Fed is not expected to touch interest rates in November, but could shift the US Dollar with hints of a December rate hike.

Australian Dollar (AUD)

In the wake of a disappointing competition report, the Australian Dollar has fallen against the Pound, Euro and US Dollar today.

The Arcadis-sourced competitiveness report has shown that Australian cities are flagging compared to more developed locations across the world, including London and Paris.

More damningly, the Greek capital of Athens  has also placed above some major Australian cities, despite the struggles experienced by Greece as a result of the global economic crash.

The Australian Dollar has a slim chance at recovering on Tuesday night if manufacturing stats rise in October.

During the month, a minor increase in the AIG manufacturing score from 54.2 points to 55 is predicted.

New Zealand Dollar (NZD)

As New Zealand Dollar traders continue to get to grips with the new government, NZD has fallen across the board.

The latest news has been that Finance Minister Grant Robertson has declared the economy a ‘blatant failure’ and pledged to go hands-on with economic management.

Given how poorly the New Zealand Dollar has fared today, the suggestion is that traders are worried about the government racking up a sizable deficit with liberal spending policies.

The next major NZ data will come on Tuesday night. If national unemployment falls in the third quarter as expected, the New Zealand Dollar could stage a recovery against its peers.

Canadian Dollar (CAD)

Poor conditions in Canada have triggered a widespread Canadian Dollar decline today.

One of the main issues has been uncertainty about when the next Bank of Canada (BOC) interest rate hike could come.

The BOC raised rates twice earlier in 2016, but recent statements have left traders unsure about when the next one will be.

While policymakers aren’t known for explicitly signposting the next rate decisions, the recent suggestion that every meeting will be ‘live’ for rate hikes has only unsettled traders.

The Canadian Dollar could remain in a poor condition on Tuesday, assuming that national GDP stats prove disappointing.

GDP growth stagnated in July and for August a minimal 0.1% rise is anticipated.

TorFX Author: TorFX

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