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Euro loses election gains, pound hits 6 month high vs. US dollar

The pound managed to strike new multi-month highs against the US, Australian, New Zealand and Canadian dollars yesterday without the backing of any positive UK developments.

The pound managed to strike new multi-month highs against the US, Australian, New Zealand and Canadian dollars yesterday without the backing of any positive UK developments.

The ECB rate decision helped GBP/EUR achieve highs of €1.1885, dissatisfaction with Trump pushed GBP/USD all the way to $1.2914, and further Canadian dollar losses meant GBP/CAD was able to surge to a new best level of C$1.7633. Meanwhile, GBP/AUD climbed another cent to AU$1.7326 as GBP/NZD achieved NZ$1.8815 – its strongest rate since July last year.

A seriously worse-than-expected US durable goods orders report didn’t help the situation and GBP/USD skipped merrily to a six-month high.

Yesterday’s European Central Bank (ECB) meeting left the euro struggling, with President Mario Draghi seeming keen to quash speculation that there are any plans to adjust monetary policy at this juncture.

Although he acknowledged that the Eurozone’s economic outlook is a little brighter, he also asserted that ‘a very substantial degree of monetary accommodation’ is still necessary in order to give inflation a leg up.

With the euro falling in the wake of Draghi’s comments, the pound was able to creep its way up to its best levels since the results of the first round of the French general election were announced.

While Draghi was responsible for the euro’s losses, it was President Trump causing reduced demand for the US dollar. Concerns that his hotly-anticipated tax plan was actually a bit of a flop saw USD exchange rates slide. A seriously worse-than-expected US durable goods orders report didn’t help the situation and GBP/USD skipped merrily to a six-month high.

Persistent weakness in the commodity currencies also worked in the pound’s favour, allowing the British currency to advance to some of its best levels since the EU referendum.

News that the GfK survey of consumer confidence softened from -6 to -7 in April failed to take the wind out of the pound’s sales on Friday.

Wise Money market data coming up

The UK and US GDP reports are some of the key highlights on the economic calendar today. If US growth slows to the extent forecast in the first quarter (from 2.1% to 1.0%) GBP/USD could be headed for even dizzier heights.

The Eurozone is also set to publish inflation figures for April. In light of Draghi’s comments yesterday, slowing inflation is liable to send the euro lower. Conversely, if non-core inflation increases to 1.8% from 1.5% as anticipated the euro could bounce back before the weekend.

Looking ahead to next week and the biggest economic movers of GBP exchange rates will be the UK’s services, construction and manufacturing PMIs for April. Indications that economic output is slowing would put the pound under pressure as campaigning for the UK snap election intensifies.

 

Pound returns to multi month highs before growth data

UK news might have been lacking yesterday but that didn’t stop the pound striking new multi-month highs against the Canadian, Australian and New Zealand dollars.

UK news might have been lacking yesterday but that didn’t stop the pound striking new multi-month highs against the Canadian, Australian and New Zealand dollars.

Sterling was also able to claw back some of this week’s losses against the euro and edge higher against the US dollar.

GBP/EUR advanced from €1.1731 to €1.1817, GBP/USD jumped from $1.2807 to brush $1.2900, GBP/AUD hit AU$1.7233 (its best level since September 2016), GBP/NZD gained two cents to achieve NZ$1.8676 (its strongest rate since last July) while GBP/CAD remained close to seven-month highs at C$1.7475.

Signs that the post-Brexit economic slowdown predicted before the EU referendum is becoming reality would be pound-negative and may leave GBP exchange rates softer before the weekend.

A blank economic calendar for the UK left the pound to be moved by external developments yesterday, and a combination of profit-taking, US news and trade concerns ensured the British currency came out on top against most of its rivals.

While the euro edged away from its recent highs ahead of the European Central Bank’s (ECB) interest rate decision, demand for the US dollar eased as President Donald Trump unveiled disappointing tax plans.

The main development was the decision to slash US corporation tax from 35% to 15%, but fears that this move could result in a ballooning US budget deficit left the US dollar struggling.

Meanwhile, a tweet from Trump condemning Canada’s perceived injustices against US dairy farmers inspired concerns that New Zealand (the world’s largest exporter of dairy products) could come under fire next, resulting in significant New Zealand dollar losses.

Demand for the Australian dollar also remained tepid after domestic inflation data fell short, reducing the odds of the Reserve Bank of Australia (RBA) increasing interest rates.

 

Wise Money market data coming up

Today’s big news item is the European Central Bank’s (ECB) interest rate decision. No changes to monetary policy are expected, but the tone and content of President Mario Draghi’s accompanying statement could inspire euro movement.

Any hints that the central bank is preparing to taper its quantitative easing programme would give the euro a boost and could drive GBP/EUR back to this week’s lowest levels.

Other news includes US trade balance, wholesale inventories and durable goods orders data. A trio of positive results would support US interest rate hike expectations and could give the US dollar a bit of a lift.

We’ll finally see some UK data on Friday, in the form of the GfK consumer confidence index and the nation’s first quarter growth data.

Signs that the post-Brexit economic slowdown predicted before the EU referendum is becoming reality would be pound-negative and may leave GBP exchange rates softer before the weekend.

Trump trade concerns send GBP higher vs. CAD, AUD, NZD

Although the pound failed to recover losses against the euro on Tuesday, the currency did manage to return to multi-month highs against the US, Australian, Canadian and New Zealand dollars.

Although the pound failed to recover losses against the euro on Tuesday, the currency did manage to return to multi-month highs against the US, Australian, Canadian and New Zealand dollars.

GBP/EUR spent most of the day below the €1.1750 level, GBP/USD rallied from $1.2803 to $1.2843, GBP/AUD advanced to AU$1.7105 (close to 2017 highs), GBP/NZD surged from NZ$1.8349 to NZ$1.8581 (its best levels since August 2016) and GBP/CAD achieved a high of C$1.7488.

Trump’s hotly-anticipated tax proposals are also due to be divulged. If they are viewed as having the potential to bolster the US economy, the US dollar could rally.

After last week’s significant pound gains the last few days have proven quite tame in terms of currency movement.

The euro was still riding high on Tuesday on the back of the outcome of the first round of the French general election and GBP/EUR recorded further losses.

However, the pound was able to advance on some of the other majors after UK data showed that Chancellor of the Exchequer Philip Hammond had hit his budget target for the 2016/2017 financial year. Although public sector net borrowing increased by more-than-expected in March, over the year as a whole it was down 28% on 2015/2016.

In fact, borrowing was at its lowest level since before the global financial crisis in 2008.

This, in combination with a drop in US consumer confidence, helped the pound climb against its US rival.

Sterling’s gains against the Canadian dollar, Australian dollar and New Zealand dollar were also the result of developments in the US.

A lumber dispute between the US and Canada sent the Canadian dollar lower and increased concerns of trade disputes developing between the US, Australia and New Zealand.

The Australian dollar came under further pressure after domestic inflation figures proved lower than forecast in the first quarter of 2017.

 

Wise Money market data coming up

The UK data calendar is light again today, with no notable reports to be aware of.

The US is set to release MBA mortgage application figures and crude oil inventories numbers, and Canada will be publishing its retail sales stats from February.

However, the main cause of currency movement in the hours ahead could be President Donald Trump’s meeting about North Korea. All senators have been called to attend the unusual gathering at the White House later today, although at the moment the agenda remains uncertain.

Trump’s hotly-anticipated tax proposals are also due to be divulged. If they are viewed as having the potential to bolster the US economy, the US dollar could rally.

According to Lloyds; ‘Reports suggest that he plans to unveil tax cuts, including a 15% corporation tax rate, and a 10% repatriation tax on companies’ stockpile of overseas earnings, although a border-adjustment tax may not be forthcoming. These measures were discussed with Congressional leaders yesterday, some of whom may question whether the proposed fiscal measures are revenue neutral.’

 

Euro holding election gains, pound recovers losses against US dollar

The euro started the week strongly, but the same couldn’t be said for the pound.

The euro started the week strongly, but the same couldn’t be said for the pound.

After spending most of last week holding multi-month highs, Sterling dropped against the euro and put on a mixed performance against several of the other major currencies.

GBP/EUR brushed a low of €1.1771 and closed the day at €1.1757, GBP/USD fell to $1.2775 before bouncing back above $1.28, GBP/AUD fluctuated between AU$1.6885 and AU$1.6993 while GBP/NZD managed to climb from NZ$1.8185 to NZ$1.8408.

While the pound fell by over 1% against a rallying euro, the British currency was able to claw back some of its losses against the US dollar as Federal Reserve rate hike expectations remain deflated.

The euro was Monday’s currency winner, recording (and holding) notable gains against the majors thanks to the outcome of Sunday’s first round of voting in the French election.

With one of the anti-EU candidates, left-wing Jean-Luc Melenchon, out of the running, the odds of a ‘Frexit’ were reduced, and demand for the common currency surged.

Although far-right Marine Le Pen made it through to the second round, recent polls see her commanding just over 30% of the final vote – with centrist Emmanuel Macron taking more than 60%.

In a surprising move, Le Pen has temporarily stepped down as leader of the National Front in hopes that campaigning ‘above partisan considerations’ will encourage supporters of the defeated candidates to back her when it’s time to return to the polls.

While the pound fell by over 1% against a rallying euro, the British currency was able to claw back some of its losses against the US dollar as Federal Reserve rate hike expectations remain deflated following President Donald Trump’s recent comments about preferring a low interest rate policy.

The only UK data of the day revealed that the post-referendum depreciation in the pound meant that factories experienced the best three month period for exports for more than six years between February and April. Less positively, plans for investment have fallen dramatically in response to continued uncertainty about the UK’s future trading relationship with the EU.

Wise Money market data coming up

UK public borrowing figures could have an impact on the pound in the hours ahead, but other than those numbers the only potentially currency-moving data on the calendar for today is the US consumer confidence report for April.

Although sentiment is believed to have fallen, if the gauge comes in at 122.5 (as expected) it will still be above the historical average.

The GBP/AUD exchange rate is likely to experience volatility overnight as RBA Governor Philip Lowe delivers a speech and Australia publishes inflation data for the first quarter.

If Lowe hints that concerns about the domestic housing and labour market could warrant a change in monetary policy, we could see significant movement from the Australian dollar.

The next UK news of note – consumer confidence figures and domestic growth data for the first quarter – isn’t due for release until Friday so in the meantime political developments and external events are likely to be the main cause of GBP fluctuations.

 

GBP/EUR hits highest levels since February

With demand for higher-risk currencies dropping in reaction to growing geopolitical tensions, the pound was able to hit new highs against currencies like the euro and US dollar.

With demand for higher-risk currencies dropping in reaction to growing geopolitical tensions, the pound was able to hit new highs against currencies like the euro and US dollar.

The GBP/EUR exchange rate advanced to €1.1821 – it’s highest levels since February – while GBP/USD approached $1.26.

GBP/AUD stormed 0.7% higher as soon as markets opened on Monday to strike AU$1.6674 while GBP/NZD rallied to NZ$1.7962.

The week’s main causes of pound movement are likely to be a speech from Bank of England (BoE) Governor Mark Carney on Thursday and the UK’s latest retail sales numbers on Friday.

Last week President Donald Trump sent the US dollar tumbling when he asserted that the currency is currently overvalued, and GBP/USD has managed to hold above the $1.25 level ever since.

The pound’s strength against the other majors is partially due to concerns surrounding the increasingly tempestuous relationship between the US and North Korea.

With North Korea attempting to demonstrate its strength over the weekend with a military parade featuring a number of long-distance missiles, currencies like the Australian and New Zealand dollars slumped.

The US dollar also slid as a result of the North Korean news on the belief that geopolitical uncertainty could prevent the Federal Reserve from increasing interest rates as rapidly as previously hoped.

Meanwhile, speculation that the outcome of the French Presidential election could be too close to call helped the pound rack up gains against the euro.

Wise Money market data coming up

There’s no UK news scheduled for release today, so pound movement could be limited.

Some GBP/USD fluctuations may be inspired by the US building permits, housing starts and manufacturing/industrial production reports.

If the data impresses, the pound may give up some of its recent gains in hopes that domestic strength will be enough to push the Fed into continuing its rate-hiking policy.

GBP/CAD could also experience movement following the release of Canada’s existing home sales report given current concerns about Canada’s housing market.

The week’s main causes of pound movement are likely to be a speech from Bank of England (BoE) Governor Mark Carney on Thursday and the UK’s latest retail sales numbers on Friday.

Consumer spending is believed to have fallen by -0.5% on the month, taking the annual figure from 4.1% to 3.8%.

If retail sales are shown to have dropped in March the pound could slide at the end of the week.

 

GBP/EUR nears €1.18 before wage data

Although the pound didn’t have much of an initial reaction to the UK’s latest inflation data, GBP later surged against is rivals as geopolitical developments left investors wary of higher-risk currencies.

Although the pound didn’t have much of an initial reaction to the UK’s latest inflation data, GBP later surged against is rivals as geopolitical developments left investors wary of higher-risk currencies.

The pound was able to approach the €1.18 level against the euro, hitting a high of €1.1780, while GBP/USD advanced by over half a cent to strike $1.2494.
Sterling’s performance against the Australian and New Zealand dollars was even more impressive, with GBP/AUD jumping to a two-month high of AU$1.6682 and GBP/NZD climbing to its best levels since December 2016 (NZ$1.8008)
If average earnings increase Sterling could extend yesterday’s gains and potentially hit new multi-week and multi-month highs.
The UK’s inflation data (billed to be yesterday’s big news item) turned out to be a bit of a non-event in terms of inspiring pound movement.
Inflation was shown to have remained at a three-year high of 2.3% in March thanks to rising tobacco, food, alcohol, and clothing prices.
However, as the result wasn’t viewed as having much influence on Bank of England (BoE) interest rate hike expectations (it would take a substantial uptick in consumer price pressures to push the central bank into adjusting policy) its impact on the pound was minimal.

But later in the day the pound came into its own amid reports that American officials had made public warnings to Russia, China and North Korea. With North Korea insinuating that it has nuclear weapons aimed at US army bases, fears that geopolitical tensions could rapidly escalate saw higher-risk currencies drop and the pound climb.

 

Wise Money markets data coming up

Today the UK is set to publish its latest batch of employment figures. The unemployment rate is expected to remain at 4.7%, with the UK having added 68k positions.
While the pound could enjoy a little boost if it turns out that the UK added more jobs than expected, the wage numbers are likely to have more influence on how GBP performs today.
If average earnings increase (despite being forecast to remain unchanged at 2.2%) Sterling could extend yesterday’s gains and potentially hit new multi-week and multi-month highs.
However, any slowing in average earnings would relieve the pressure on the BoE to make adjustments to interest rates and could send the pound tumbling in the hours ahead.
Other news to watch out for today includes a speech from BoE Governor Mark Carney and the Bank of Canada (BoC) interest rate decision.
The BoC isn’t expected to make any adjustments to monetary policy but if it issues cautious commentary about the risks facing the domestic economy, the GBP/CAD exchange rate could climb.

Sterling bounces back on service sector strength

Wednesday turned out to be pretty positive for the pound thanks to an unexpectedly upbeat UK services report.

Wednesday turned out to be pretty positive for the pound thanks to an unexpectedly upbeat UK services report.

GBP/EUR surged from €1.1645 to €1.1717, GBP/USD rebounded from $1.2439 to $1.2499 and GBP/AUD jumped from AU$1.6403 to AU$1.6539. GBP/NZD, meanwhile, struck its best levels of 2017 by advancing from NZ$1.7821 to NZ$1.7952.
Whether or not the GBP/EUR exchange rate is able to push comfortably above €1.17 largely depends on a run of speeches from ECB officials.
Yesterday’s pound gains were almost entirely driven by the UK’s services PMI from Markit.
As the services sector accounts for over 70% of total economic growth, the news that the index edged up from 53.3 to 55.0 in March was enough to send GBP exchange rates higher.
This was the strongest rise in service sector activity of the year so far, prompting this response from Duncan Brock of the Chartered Institute of Procurement & Supply; ‘Taking March in isolation, the service sector defied the slowdown experienced by construction and manufacturing firms. A stronger end to the first quarter from the biggest contributor to UK GDP will provide some relief to the UK economy as a whole, shaken and stirred by continuing highs and lows since the Brexit vote.’
The report was good enough to counteract the impact of Bank of England policymaker Gertjan Vlieghe asserting that there’s no need for UK interest rates to be increased anytime soon and the pound managed to hold gains overnight.

Wise Money market data coming up

There isn’t much happening in the UK today, so the currency market is more likely to be moved by developments in the Eurozone and US.
Whether or not the GBP/EUR exchange rate is able to push comfortably above €1.17 largely depends on a run of speeches from ECB officials.
Any references to the future path of monetary policy from ECB President Mario Draghi, Vice President Vítor Constâncio or Executive Board Member Peter Praet could inspire notable euro movement.
If the officials indicate that policy is unlikely to be adjusted for the foreseeable future, GBP/EUR could potentially advance to its best levels of the week so far.
However, any hints that either the central bank’s quantitative easing scheme could be tapered or that interest rates could rise sooner than expected would help EUR exchange rates climb before the weekend.
Over in the US we’ve got initial jobless claims and continuing claims numbers. Yesterday’s US employment report smashed forecasts and more positive jobs figures would lend the US dollar support ahead of tomorrow’s influential non-farm payrolls data.

Services PMI, Trump and French elections in focus, will GBP keep sliding?

The pound held losses against the euro and US dollar on Tuesday, with GBP/EUR fluctuating between €1.1700 and €1.1643 and GBP/USD ending the day at $1.2425.

The pound held losses against the euro and US dollar on Tuesday, with GBP/EUR fluctuating between €1.1700 and €1.1643 and GBP/USD ending the day at $1.2425.

Although demand for higher-risk currencies faltered, the pound also dipped to a low of AU$1.6402 against the Australian dollar. Sterling did manage to hold its own against the New Zealand dollar however (despite an increase in dairy prices) with GBP/NZD reaching a high of NZ$1.7862.
The UK’s services PMI is likely to be the main cause of pound movement, with a positive result having the potential to send Sterling back to its weekly highs.
Although yesterday’s UK construction PMI showed an unexpected dip in output in March, the report had little real impact on the pound.
As Monday’s manufacturing measure also fell short, the release increased concerns that today’s much more influential services PMI will complete a hat trick of less-than-impressive stats and indicate that the UK economy faltered at the end of the first quarter. However, general anxieties about the global economic outlook were the main cause of weakness in GBP exchange rates.
There are a number of factors reducing risk appetite at the moment, including the French election, the suspected terrorist attack in St Petersburg and concerns about the direction this week’s meeting between US President Donald Trump and Chinese President Xi Jinping could take. These anxieties served to boost the safe-haven US dollar but limit demand for the pound.

GBP/EUR losses were also the result of the Eurozone publishing more upbeat data, with the region’s latest retail sales report showing a stronger-than-expected increase in consumer spending.

Wise Money market data coming up

The UK’s services PMI is likely to be the main cause of pound movement in the hours ahead, with a positive result having the potential to send Sterling back to its weekly highs.
As it stands, economists have forecast a modest acceleration in growth from 53.3 to 53.5.
However, if the services measure falls (like its manufacturing and construction equivalents) the pound could keep sliding.
US data may also inspire GBP/USD movement today, with the nation set to publish the ADP employment change number and services PMI.
The labour data is forecast to show a deceleration in the number of positions added in March. As any softening in employment is likely to prevent the Federal Reserve from revising its current plans to increase interest rates just twice more in 2017, the US dollar could fall if the report meets expectations.

Pound dips on UK manufacturing slump

After starting the week strongly, the pound spent Monday sliding against currencies like the US dollar and euro.

After starting the week strongly, the pound spent Monday sliding against currencies like the US dollar and euro.

The GBP/EUR currency pair fell from a high of €1.1741 to a low of €1.1636, while GBP/USD snuck back below the key $1.25 level to trade in the region of $1.2442.

The pound’s losses against the commodity currencies were less significant, with GBP/AUD managing to return to trading at AU$1.6438 following the Reserve Bank of Australia’s (RBA) interest rate decision. GBP/CAD also held pretty steady as the resumption of oil production in Libya saw the price of Canada’s core commodity dip.

A construction PMI reading of less than 52.5 could see the pound extend its recent losses against the euro and US dollar.

The main cause of the pound’s Monday downtrend was the UK manufacturing PMI from Markit.
The gauge had been forecast to come in at 55, but it actually fell to 54.2 in March. February’s figure was also negatively revised to 54.5.
Although the report contained a fair few positives, it also indicated that growth in the sector is expected to keep easing.
Markit Senior Economist Rob Dobson noted; ‘With growth losing further momentum in March, that weaker trend is likely to continue into the second quarter. The latest survey also clearly shows that high costs and weak wage growth are sapping the strength of consumers, with rates of expansion in output and new orders for these products slowing further.’
Meanwhile, the euro was supported by a decline in the Eurozone’s unemployment rate from 9.6% to 9.5%. The currency bloc’s manufacturing PMI also came in at its best level in six years.

Over in Australia, a disappointing Australian retail sales report was swiftly followed by the Reserve Bank of Australia’s (RBA) latest interest rate decision. While the central bank left interest rates on hold, the concerns it expressed about Australia’s housing market kept the ‘Aussie’ under pressure.

Wise Money market data coming up

Today’s main UK news is the nation’s construction PMI for March. The index is expected to come in at 52.5, unchanged from February.
While the UK construction sector only accounts for around 6% of total economic growth, a below-forecast reading would increase concerns that tomorrow’s much more influential services PMI will also show a slide in output.
Subsequently, a reading of less than 52.5 could see the pound extend its recent losses against the euro and US dollar.
However, the GBP/EUR pairing could fight back in the afternoon if the Eurozone’s retail sales stats disappoint or if European Central Bank (ECB) President Mario Draghi indicates that monetary policy is unlikely to be adjusted for the foreseeable future.
The GBP/USD exchange rate could also experience further movement before the end of the day as the US publishes its factory orders and durable goods orders numbers for February.

Pound hits March high vs. euro

The beginning of Brexit didn’t faze the pound yesterday, with the currency racking up gains all over the place.

The beginning of Brexit didn't faze the pound yesterday, with the currency racking up gains all over the place.

GBP/EUR achieved its best levels of March, surging from a low of $1.1550 to hit $1.1700. While the pound wasn’t able to return to trading above $1.2500 against the US dollar it did gain half a cent despite a sturdy US growth figure.

Sterling stormed higher against the New Zealand dollar, rallying almost 2 cents to achieve a best rate of NZ $1.7890. GBP/AUD gains were slightly less impressive, with the pound failing to hold a high of A$1.6352 and closing the day at AU $1.6267.

What’s been happening?

Although the UK is now facing two years of potentially arduous Brexit negotiations, the pound is currently benefiting from the pretty friendly tone of initial communications between Britain and the EU.

Lloyd’s of London did announce that it would be relocating jobs to Brussels, but markets were cheered by the governmentís plan to implement the ‘Great Repeal Bill’ in May – a move which will turn an epic list of EU laws into British ones.

The pound was also able to advance on the euro due to a disappointing set of inflation figures for Germany. With the nation’s consumer price index decelerating by significantly more than expected, hopes that the European Central Bank (ECB) will tighten stimulus in the near future dimmed, and the euro softened accordingly.

In terms of UK data, the GfK consumer confidence index held at -6 in March rather than sliding to -7 as forecast. The Lloyds business barometer was less reassuring however, dropping from 40 to 35.

What’s coming up?

Already today Nationwide house price figures have fallen short of the mark, with property prices sliding -0.3% on the month (instead of climbing 0.3%) and rising 3.5% on the year (down from price growth of 4.5% in February).

Currency volatility could be on the horizon next week thanks to a number of high-profile data releases. For the UK we’ve got manufacturing, construction and services PMIs, manufacturing/construction output numbers and trade balance figures. If the UK’s PMIs show that growth in the nation’s three key sectors remained robust in March, it would up the odds of more Bank of England (BoE) policymakers voting for higher borrowing costs and give the pound a boost.

The Eurozone will be offering up unemployment and retail sales numbers, along with German factory orders and construction stats. Meanwhile, US dollar fluctuations are most likely to occur in response to the US non-farm payrolls data. Sturdy employment figures would support Fed rate hike expectations (and the US dollar) while any sign of weakness in the labour market could put the plan for two further rate hikes in jeopardy and leave USD exchange rates weaker.