Pound (GBP) Exchange Rates Slide on Below-Forecast Wage Growth
Sterling slipped slightly on Tuesday morning, floundering as markets reacted to a below-forecast wage growth print.
According to the Office for National Statistics (ONS), average weekly earnings were up 2.8% in the three months to February, falling short of the market forecast of 3.0%.
This is, however, still a robust rise and officially marks the first time in a year that wage growth has exceeded the UK’s high levels of inflation.
Beyond this, the ONS also reported that unemployment has fallen to 4.2%, marking a fresh 42-year low and seemingly cementing hopes that the Bank of England (BoE) will move for a rate hike in May.
It would appear that the poor market reaction to these results seems to be due to disappointment that the tightening labour market has failed to effectively push up pay.
Eurozone ZEW Economic Sentiment Surveys Disappoint – GBP/EUR Exchange Rate Falls Regardless
The Pound Euro (GBP/EUR) exchange rate fell this morning, even with at least one German recession indicator now flashing orange.
A notable drop in industrial production and falling confidence indicators have caused a German think-tank to sound its recession alarm for the bloc’s largest economy.
The Macroeconomic Policy Institute (IMK) has stated that the danger of a German recession in the next quarter has climbed ‘markedly’ in April, claiming that the probability is now at 32.4%, 6.8% higher than it was in March.
Beyond this, the latest ZEW current situation survey for Germany contracted to a score of 87.9, down from 90.7, whilst the future expectations reading plummeted from 5.1 to -8.2.
US Dollar (USD) Exchange Rates up Ahead of Industrial, Manufacturing Data
The Pound US Dollar (GBP/USD) exchange rate traded lower on Tuesday, with the ‘Greenback’ rallying as concerns over conflict in Syria and a trade war with China ebbed.
Markets are currently waiting for today’s round of US ecostats, which will include building permits, housing starts, industrial production and manufacturing production.
Beyond these, speeches from US Fed Presidents John Williams and Charles Evans could also prove pertinent, with any indication of 4 rate hikes this year liable to put GBP/USD under even more pressure.
GBP/CAD Exchange Rate Down as Markets Brace for next Bank of Canada Rate Decision
The Canadian Dollar strengthened on Tuesday as stocks rose and investors prepared for the potential of a slightly more upbeat economic assessment from the Bank of Canada (BoC) at the monetary policy decision meeting this week.
The central bank has not raised its baseline interest rate since January, with the bank instead opting for caution as policymakers waited for slightly more robust assessments of the domestic economy.
With the prospect of a revamped NAFTA deal having improved, and inflation steadily accelerating, however, analysts are now slightly more hopeful that the central bank will be hawkish on this occasion.
This provided a notable boost to the ‘Loonie’.
GBP/AUD Exchange Rate Down Despite Dovish RBA Minutes
The Pound Australian Dollar (GBP/AUD) exchange rate declined this morning, even with the ‘Aussie’ Dollar struggling in light of some rather dovish Reserve Bank of Australia (RBA) minutes.
The RBA’s latest meeting minutes revealed that the bank expects the Australian economy to continue on a gradual path of growth – indicating that a hawkish shift in monetary policy is unlikely for the foreseeable future.
Indeed, the minutes illustrated that there was no strong case for a near-term adjustment in monetary policy, as progress in curbing unemployment and acceleration in inflation is likely to remain gradual.
On the data front, Chinese GDP rose by 6.8% in Q1 2018, in line with expectations but down from the previous period’s 6.9% score.
This is, however, still a robust reading, and is positive news for Australia’s largest trading partner.
GBP/NZD Exchange Rate Climbs as Markets Prepare Cautiously for the Global Dairy Trade Auction
The New Zealand Dollar (NZD) has remained rather weak against the Pound this morning as markets cautiously prepared for the latest global dairy trade price auction.
The past four auctions have all yielded price drops, and markets are concerned that another fall could limit the performance of the ‘Kiwi’ Dollar.
This is largely due to the ongoing issue of oversupply which is plaguing the dairy market, pressuring New Zealand’s chief export and the New Zealand economy as a whole.