The Pound (GBP) ticked higher against most of the other majors yesterday following the release of robust unemployment figures from the UK.
However while the UK unemployment rate held at a twelve year high of 4.7%, markets have grown increasingly concerned about the slow rate of wage growth as it fails to keep ahead of the current rate of inflation, with analysts predicting that consumer spending will begin to plummet in the second quarter of 2017.
After striking a new monthly high on Wednesday morning, the Pound Euro (GBP EUR) exchange rate began to retreat yesterday evening as the drop in the US Dollar (USD) led to an uptick in the single currency.
However GBP EUR recovered its losses earlier this morning as the final German inflation reading for March confirmed that the inflation rate had tumbled from 2.2% to 1.5%.
The Euro also continues to be pressured by the uncertainty of the French elections as the sudden surge in support for left-wing Eurosceptic Jean-Luc Melenchon has rattled investors.
Sterling rocketed up against the US Dollar yesterday evening, gaining over half a cent as Donald Trump’s comments that the ‘Dollar is getting too strong’ sent the ‘Greenback’ into a tailspin.
Trump also suggested that he would want the Federal Reserve to leave interest rates low, causing USD investors to flee to other markets.
The US Dollar may fall even further this afternoon following the release of the latest Michigan Consumer Sentiment survey, which economists predict will slide from 96.9 to 96.5 after confidence in the new administration tumbled in recent weeks.
The Pound Canadian Dollar exchange rate trended slightly lower yesterday afternoon following the Bank of Canada’s (BOC) latest monetary policy meeting.
While the bank voted to leave interest rates unchanged at 0.5% BOC Governor Stephen Poloz struck a surprisingly upbeat tone on the outlook for Canada’s economy, leading markets to speculate that a rate hike may be incoming.
After striking a new two-month high against the Australian Dollar (AUD) yesterday, Sterling slid over a cent overnight as Australia released unexpectedly strong employment data.
While the unemployment rate held at 5.9% as expected the Employment Change in March rocketed up from 2.8k to 60.9k, easily sailing past initial expectations that the number of Australian’s joining the workforce would only rise to 20k.
New Zealand Dollar
The Pound Zealand Dollar (GBP NZD) exchange rate painted a similar picture to GBP AUD yesterday as Sterling fell from its best levels overnight following a surprisingly upbeat Business PMI reading as it surged from 55.2 to 57.8 last month.
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.
Last update: 22 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