Pound (GBP) Exchange Rates Struggle as BoE Broadbent Refuses to Provide Monetary Policy Clues
Sterling exchange rates stumbled on Thursday morning, limited by yesterday’s rather poor production readings and the latest below-forecast NIESR estimate for Q1 2018.
In other news Bank of England (BoE) Policymaker Ben Broadbent neglected to discuss monetary policy at his latest speech, disappointing investors who had hoped for some kind of indication that the central bank might be moving for a rate hike in May.
The BoE also released their credit conditions review and bank liabilities survey for Q1 2018, though both of these surveys proved rather lacklustre for the markets, ultimately leaving Sterling trading sideways.
Markets are currently keeping an eye on the developing situation in Syria, with military intervention from the UK liable to cause some volatility in the markets due to Russia’s warning that they will retaliate if the west launches missile strikes.
GBP/EUR Exchange Rate Climbs as Eurozone Industrial Production Disappoints in February
The Pound Euro (GBP/EUR) exchange rate inched higher this morning, capitalising on an insipid performance in industrial production for the bloc.
According to Eurostat, industrial production slipped from 3.7% to 2.9% year-on-year, with the monthly reading similarly falling from -0.6% to -0.8%.
These disappointing results were largely due to falling production in most categories except energy, which saw a surge in output of 6.8%.
This news, combined with the upbeat US wage growth readings yesterday, gave GBP/EUR a little boost.
GBP/USD Exchange Rate Falters as US Inflation Climbs at Fastest Pace in Over a Year
The Pound US Dollar (GBP/USD) exchange rate encountered difficulties this morning, limited by yesterday’s positive run of US data releases.
This included a marked acceleration in US consumer price growth year-on-year, which increased from 2.2% to 2.4% in March; an increase in real average hourly earnings from 0.3% to 0.4%; and an increase in the core inflation reading from 1.8% to 2.1% (year-on-year).
On a monthly basis, however, consumer prices slipped in March from 0.2% to -0.1%.
Nonetheless the inflation reading and the wage growth pickup will likely pressure Fed officials into moving for four rate hikes this year, particularly if the labour market continues to tighten.
GBP/CAD Exchange Rate Climbs as Officials Claim NAFTA Deal is Premature
The Canadian Dollar (CAD) continued to shed gains on Thursday as markets reacted to claims that the North American Free Trade Agreement (NAFTA) is still premature.
According to Canadian union leader Jerry Dias, member nations are ‘not close to a deal at all’.
‘There’s way too many tables that have yet to be closed… The main issues around auto, labour standards, Chapter 11 – those issues haven’t been resolved yet at all.’
Neither are markets expecting an agreement to be reached in time for the Lima summit in Peru this week, but there is some hope for an agreement in May.
This outlook has kept the GBP/CAD exchange rate on steady ground.
GBP/AUD Exchange Rate Trades Flat as Australian Consumer Inflation Expectations Dip
Australia’s consumer inflation expectations eased to 3.6% in April, down from the prior month’s score of 3.7%.
This boded poorly for the ‘Aussie’ Dollar, with markets concerned that any indication of weak inflation could push the Reserve Bank of Australia (RBA) even further away from a rate hike this year.
Looking ahead, tomorrow’s trade figures out of China will have big implications for the GBP/AUD exchange rate, with a forecast rise in imports by 10%, up from the prior month’s 6.3%.
If this occurs then the ‘Aussie’ Dollar could see renewed demand, with China being one of their largest trading partners.
GBP/NZD Exchange Rate Tumbles as ‘Kiwi’ Dollar Confounds Expectations
The Pound New Zealand Dollar (GBP/NZD) exchange rate fell on Thursday, with the ‘Kiwi’ Dollar seemingly immune to market concerns over the developing situation in Syria and yesterday’s upbeat US wage growth readings.
In other news, Sunday will feature New Zealand’s food inflation and services PSI figures (both for March), with a forecast rise in both readings liable to continue to put GBP/NZD under pressure.
This week the US Dollar was touching three-year highs when valued against a basket of major currencies. The greenback’s traditional role as one of the safe-haven currencies is helped by a domestic economy that is largely immune to the threats of the coronavirus.
Posted: 21 Feb, 2020
The strong start to the year for “risk-on” currencies is already a distant memory.
Posted: 3 Feb, 2020
The threat of a proxy war between the US and Iran in Iraq has pared back some of the recent gains of “risk-on” currencies.
Last update: 8 Jan, 2020