Posts belonging to Category Brexit



GBP recovers despite threat of hard Brexit

After a more than sluggish start to the week, the pound finally managed to recoup some losses on Tuesday.

After a more than sluggish start to the week, the pound finally managed to recoup some losses on Tuesday.

GBP/EUR advanced from €1.1529 to €1.1614, GBP/USD peaked at $1.3021 (up from lows of $1.2956), GBP/AUD marched from AU$1.7265 to AU$1.7431 and GBP/NZD improved from NZ$1.8418 to NZ$1.8563.

If Draghi holds with the view that the current level of stimulus is appropriate the euro could slide.

 

Wise Money market roundup

The pound’s Tuesday gains came in spite of fairly damning comments from German Finance Minister Wolfgang Schaeuble.

The German official warned that Britain ‘will learn Brexit was a mistake’ – indicating that the Eurozone’s largest economy has no intention of making the negotiations easy for the UK.

Other UK news was also less-than-inspiring, with data from the Office for National Statistics (ONS) showing that the UK borrowed significantly more than anticipated in April.

Elsewhere, the euro was supported by upbeat data for the Eurozone, including an impressive manufacturing report for the currency bloc.

The US dollar, meanwhile, fluctuated as the US services index impressed but the nation’s manufacturing equivalent fell short.

What’s coming up money wise?

The pound crept higher on Wednesday, recording modest gains against most the main currencies.

There’s nothing notable on the calendar in terms of UK data today, so any further pound movement is likely to be the result of either political developments or influence from elsewhere.

This morning’s German GfK consumer confidence result beat forecasts, edging up from 10.2 to 10.4, but its impact on the euro was minimal.

However, GBP/EUR volatility may follow today’s speech from European Central Bank (ECB) President Mario Draghi. Earlier in the week German Chancellor Angela Merkel blamed the ECB’s quantitative easing scheme for the relative weakness of the euro.

Any response Draghi makes to those remarks will be closely attended to. If Draghi holds with the view that the current level of stimulus is appropriate the euro could slide.

We also have the Bank of Canada (BOC) interest rate decision, with a cautious tone from the central bank liable to boost the GBP/CAD exchange rate.

Of course we may also see GBP/USD movement following the publication of the minutes from the Federal Reserve’s last policy meeting. Support for a rate increase in June would benefit the US dollar.

 

 

Pound gives up retail sales gains on flash crash

An upbeat UK retail sales report gave the pound a boost on Thursday, but a surprising ‘flash crash’ in the evening saw GBP give up its gains.

An upbeat UK retail sales report gave the pound a boost on Thursday, but a surprising ‘flash crash’ in the evening saw GBP give up its gains.

GBP/EUR fell from €1.1727 to €1.1627, GBP/USD dropped from $1.3041 to $1.2923, GBP/AUD tumbled from AU$1.7569 to AU$1.7380 and GBP/NZD fluctuated between NZ$1.8691 and NZ$1.8841.

Of course, with the UK general election fast approaching, political developments could take centre stage in the weeks ahead.

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Wise Money market roundup
After struggling for most of the week the pound staged an impressive rebound on Thursday thanks to a better-than-forecast set of retail sales figures for the UK.

Despite stagnant wage growth and soaring inflation, British consumers shopped until they dropped in April. Retail sales surged by 2.0% on the month and 4.5% on the year – smashing forecasts of 1.0% and 2.6%.

Although economists expect consumer spending to fall in the months ahead, the unexpected resilience in retail sales shown last month was enough to help the pound recover much of this week’s losses.

GBP/USD was also supported by the ongoing Trump scandal, with impeachment murmurs keeping the US dollar under pressure.

However, in the evening the pound experienced an unexplained reversal. The sudden GBP losses were attributed to a ‘flash crash’ and the currency remained at its lower levels on Friday.

What’s coming up money wise?

Of the economic reports due for release today, the ones most likely to inspire currency fluctuations include the Eurozone’s current account and consumer confidence figures (with positive results having the potential to boost the euro) the UK’s CBI trends total orders/trends selling prices stats and Canada’s retail sales and inflation numbers.

Next week is pretty light in terms of influential UK data, with only public borrowing and first quarter GDP stats due to have much of an impact on the pound.

A slower rate of growth in the first three months of 2017 could leave Sterling struggling.

Of course, with the UK general election fast approaching, political developments could take centre stage in the weeks ahead. The pound may be bolstered if polls show that support for the Conservatives remains strong as the general consensus appears to be that a win for Theresa May could strengthen Britain’s hand during Brexit negotiations.

 

 

 

Two US rate hikes still expected for 2017

Signs that the UK’s Brexit negotiations are going to be a bit more tempestuous than hoped have left the pound a bit despondent this week, with the currency failing to see much benefit from positive domestic data.

Signs that the UK’s Brexit negotiations are going to be a bit more tempestuous than hoped have left the pound a bit despondent this week, with the currency failing to see much benefit from positive domestic data.

In the past 24 hours the GBP/EUR exchange rate has fallen from €1.1846 to lows of €1.1799 while GBP/USD has slumped from $1.2935 to $1.2842. However, GBP/AUD has risen from AU$1.7246 to AU$1.7393 and GBP/NZD has advanced from NZ$1.8623 to NZ$1.8751.

 

Wise Money roundup

Yesterday’s UK construction PMI continued the week’s theme of better-than-forecast UK data by coming in at 53.1 in April, up from 52.2 in March. This followed hot on the heels of Tuesday’s unexpectedly strong manufacturing report.

As the construction sector contributes so little to total economic output, the result was a pleasant surprise but had little positive impact on Sterling.

In fact GBP exchange rates actually weakened on Wednesday thanks to concerns that the UK’s Brexit negotiations were already getting off to a bad start.

Accusations from Prime Minister Theresa May that Brussels was interfering in the UK election and threats of a whopping €100 billion exit bill saw the pound drift lower against the euro.

GBP/USD also fell in the wake of the Federal Reserve’s interest rate decision. While the central bank took no action at this juncture, it left the door wide open to two further rate increases over the rest of 2017.

The Fed’s statement asserted that it ‘views the slowing in growth during the first quarter as likely to be transitory.

While expectations of a June adjustment supported the US dollar, a softening in higher-risk currencies helped the pound stand firm against the Australian and New Zealand dollars.

What’s coming up?

Rumours that the Queen has called a meeting of ‘all staff’ at Buckingham Palace have been dominating headlines today, but as long as the subject of the meeting doesn’t have an economic focus the UK’s services PMI is still likely to be the main cause of pound movement today.

A hat-trick of positive results would give the pound a boost, but if the all-important services sector is shown to be struggling the pound could extend recent losses.

Eurozone retail sales data is also likely to impact the GBP/EUR pairing. As it stands, sales are believed to have stagnated on the month but risen from 1.8% to 2.1% on the year.

While better-than-expected figures could send the euro higher, gains may be limited ahead of the second round of the French election – due to take place on Sunday. Over in the US we’ve got trade balance, initial jobless claims and durable goods orders data to focus on.

 

 

 

Euro jumps on French election results

The pound spent much of last week holding multi-month highs against the major currencies but returned from the weekend in a generally softer position.

The pound spent much of last week holding multi-month highs against the major currencies but returned from the weekend in a generally softer position.

GBP/EUR dropped from €1.1948 to €1.1790, GBP/USD dipped from $1.2854 to $1.2777, GBP/AUD slumped from AU$1.6990 to AU$1.6897 and GBP/NZD eased slightly from NZ$1.8292 to NZ$1.8177.

GBP/EUR dropped by over 1% on Monday as the euro soared in response to the outcome of the first round of the French Presidential election.

After surging on the back of optimism surrounding the UK’s snap general election, demand for the pound eased slightly on Friday following a less-than-impressive domestic retail sales report.

The data showed an unexpectedly steep slump in consumer spending in March, and some believe this heralds the beginning of the general Brexit-inspired economic slowdown predicted before the referendum.

Although pound losses were limited by hints from a Bank of England (BoE) policymaker about his plans to vote for higher borrowing costs in the near future, GBP exchange rates were left down on the week’s best levels.

GBP/EUR then dropped by over 1% on Monday as the euro soared in response to the outcome of the first round of the French Presidential election.

With centrist Emmanuel Macron and far-right Marine Le Pen making it through to the second round, and Macron expected to triumph in the second vote, the odds of France exiting the EU fell significantly. The euro jumped by over 1% against the pound, US dollar, New Zealand dollar and Swiss franc on the news.

 

Wise Money market data coming up

Today’s economic calendar highlights are German IFO business surveys, UK Confederation of British Industry (CBI) reports and Canadian wholesale sales data.

The German IFO gauges of business climate and expectations are expected to show improvement in April, while the UK’s business optimism, trends total orders and trends selling price figures are all forecast to dip.

If these predictions prove accurate the pound could extend losses against the euro as trading continues.

As last week’s Canadian inflation data fell short of the mark (leaving the Canadian dollar broadly weaker) another disappointing domestic report may help the pound recoup some of today’s losses against the ‘Loonie’.

 

Will the pound extend its election gains next week?

After an explosive start to the week pound fluctuations have been fairly minimal, with the currency managing to hold on to the multi-month highs achieved after Tuesday’s election announcement.

After an explosive start to the week pound fluctuations have been fairly minimal, with the currency managing to hold on to the multi-month highs achieved after Tuesday’s election announcement.

GBP/EUR began the week around €1.1790 and looks set to close it above €1.19, GBP/USD is up from $1.25 to $1.28, GBP/AUD is riding high at AU$1.70 (having started the week at AU$1.65) and GBP/NZD has recovered from NZ$1.78 to NZ$1.82.

The outcome of the first round of the French election will be the driving force behind shifts in the euro for much of next week.

The pound largely remained at its best levels of 2017 against all the major currencies on Thursday, with UK election expectations lending support to GBP exchange rates.

GBP/EUR was able to cling to the €1.19 level despite the euro getting a boost from a poll predicting victory for pro-EU candidate Emmanuel Macron in the upcoming French election.

Economic data had little-to-no impact on pound trading as investors fixated on the belief that June’s UK election will result in an increased majority for the Conservatives and subsequently strengthen Theresa May’s negotiating position in Brexit talks with the EU.

 

 

Wise Money market data coming up

Although election news is likely to remain one of the main catalysts for currency movement in the days and weeks ahead, there are some entries on next week’s economic calendar worth watching out for.

Pound – If concerns about the upcoming election emerge the pound has the potential to reverse this week’s gains. Sterling may also be pressured lower if upcoming reports (including the Rightmove house price index, public finance figures, the GfK consumer confidence gauge and GDP data for the first quarter) indicate that UK economic output is easing.

Euro – The outcome of the first round of the French election will be the driving force behind shifts in the euro for much of next week. If Macron dominates proceedings the common currency could climb. However, if either Le Pen or Melenchon (the anti-EU candidates) appear to have the most support, we can expect losses for EUR exchange rates.

US dollar – There are several high-impact US releases scheduled for next week, including a consumer confidence gauge, trade balance numbers, durable goods orders figures and Q1 GDP. Any reports which reduce the odds of the Federal Reserve increasing interest rates in June could send USD lower, while data supportive of higher borrowing costs would be US dollar positive.

Other – General risk sentiment will keep the Australian, New Zealand and Canadian dollars on their toes in the days ahead, but Australian inflation numbers and a speech from an RBA official also have the potential to inspire AUD fluctuations. From New Zealand we’ve got credit card spending numbers, trade balance data and the ANZ business confidence index to focus on, while CAD shifts may follow the publication of domestic retail sales and GDP numbers.

 

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.

Pound falls before Brexit begins

After riding high at the beginning of the week the pound slid against all the majors on Tuesday.

After riding high at the beginning of the week the pound slid against all the majors on Tuesday.

GBP/EUR dropped from a high of $1.1601 to a low of $1.1453 while GBP/USD tumbled from $1.2591 to $1.2383. The poundís performance against the commodity currencies was equally poor, with GBP/AUD sliding from a two-month high and the GBP/NZD exchange rate plummeting from its best levels since last December.

The pound’s impressive start to the week proved short lived and the currency racked up a number of sizable losses on Tuesday. The GBP slide was largely attributed to profit-taking, although comments from the Bank of England’s (BoE) Ian McCafferty didn’t help the situation.

The BoE policymaker indicated that the UK economy is likely to experience a gradual slowdown in the months ahead. He added that he was uncertain about when he would feel confident enough to vote to increase interest rates.

According to McCafferty, the BoE ‘will be raising interest rates and eventually reversing QE (bond purchases) as soon as the economy looks strong enough to bear it. I think the economy is strengthening slightly over the course of last year and into the early part of this year. Whether it stays as strong is still very much an open question, because we are seeing inflation starting to pick up.’

The GBP/USD exchange rate also fell as the US dollar was supported by an impressive US consumer confidence score while GBP/CAD declined in the face of surging oil prices.

What’s coming up?

Today it’s all about Brexit, and the official start of the UK’s two year negotiations with the EU. Prime Minister Theresa May is set to activate Article 50 of the Lisbon Treaty at lunchtime today.

According to Lloyds Bank; ‘The Article 50 letter, signed by PM May, will be hand delivered by Sir Tim Barrow, the UK’s permanent representative in Brussels, to EU Council President Donald Tusk. – The contents of the letter will be examined for any differences with Mrs Mayís Lancaster House speech in January which detailed the government’s negotiating objectives, including the future trading relationship with the EU.’

While the pound could extend yesterday’s losses once Article 50 is activated, some economists believe the event has been so long anticipated that GBP exchange rates could actually climb on the news.

Sterling’s long-term outlook is a little less certain however. The tone of the initial Brexit negotiations will be crucial. If it appears that the EU is unlikely to make many concessions (or if it looks as though PM May will be pursuing a so-called ‘hard Brexit’) we may see the pound give up the advances itís made over the past few months.

Trump worries send GBP higher, Scottish vote ahead

The pound enjoyed a day of pretty solid gains at the start of the week.

The pound enjoyed a day of pretty solid gains at the start of the week.

With the currency rising to an almost two month high against the US dollar while recording its best level against the Canadian dollar since December. GBP/AUD also marched to its highest rate since February, although the poundís gains against the euro were more muted.

GBP/EUR spent the day fluctuating between ‘1.1467 and ‘1.1615, GBP/USD advanced from a low of $1.2365 to a high of $1.2612 and GBP/CAD stormed to a high of C$1.6872.

Whatís been happening?

Yesterday the pound managed to romp higher against most of its currency rivals despite a lack of juicy UK data. The currencyís gains were largely in reaction to developments in the US, with a lack of confidence in President Trumpís abilities to push through economic policies triggering heavy US dollar losses.

Comments from Fed policymaker Charles Evans also kept the US dollar under pressure. Although the Federal Reserve Bank of Chicago President indicated that he still envisages three rate hikes taking place this year, he added that two may be appropriate if the current inflation uncertainty persists.

Meanwhile, upbeat German IFO surveys limited the poundís gains against the euro, with German business morale hitting its best level for almost six years.

What’s coming up?

Today the Scottish government is expected to vote in favour of making a request to Westminster for a second independence referendum. Yesterday Prime Minister Theresa May visited Scotland in order to urge Scottish voters to keep Britain unified, asserting that (with Brexit negotiations about to kick off) now is not the time for more discord.

If the Scottish government does vote in favour of pushing forward with referendum plans, the pound could register modest losses later today.

GBP exchange rates may also start giving up their recent gains ahead of tomorrow and the much-anticipated activation of Article 50.

There’s no UK data on the calendar today, but there are US trade balance and consumer confidence figures to look out for. Speeches from various Fed officials (including Chairwoman Janet Yellen) will also be drawing focus, with any interest rate-related remarks having the potential to either send the US dollar lower still or help it recover ground.

Additionally, the GBP/CAD exchange rate could move away from its recent highs if Bank of Canada Governor Stephen Poloz adopts an optimistic tone in todayís speech.

Pound steady as Article 50 trigger date approaches

Although we’re now only six days away from the long-awaited activation of Article 50, the pound is proving resilient and its best levels of the week could be yet to come.

Although we’re now only six days away from the long-awaited activation of Article 50, the pound is proving resilient and its best levels of the week could be yet to come.

Sterling edged slightly lower yesterday as excitement over the inflation surge eased. However, GBP largely returned to opening levels before the close of the European session despite the UK being shaken by a terror attack in London.

GBP/EUR was holding ‘1.1546, GBP/USD remained close to $1.2500 and GBP/AUD held firm above AU$1.6250.

What’s been happening?

After the flurry of activity inspired by the UK’s inflation report earlier in the week, trading was a little flat on Wednesday.

A lack of high-profile data prevented the pound advancing further as the eyes of the world turned to the shocking events that took place outside the Parliamentary building in London.

Meanwhile, the decline in bets that the Federal Reserve will increase interest rates more than three times in 2017 weakened demand for the US dollar and the euro failed to display much response to a 15-month low Eurozone current account surplus.

Down in the South Pacific, the Reserve Bank of New Zealand (RBNZ) left interest rates on hold as expected. The central bankís policy statement was little changed from February, although it did seem slightly less concerned about the relative strength of the New Zealand dollar. The upshot of the announcement was that the GBP/NZD exchange rate got to hold its previous 2 cent gain.

What’s coming up?

Aside from the UK retail sales numbers, we have a speech from Fed Chairwoman Janet Yellen and Eurozone consumer confidence data on the calendar for today.

The pound could hit its highest levels of the week so far if the UK sales report shows the forecast uptick in consumer spending, but the recent terror incident may limit demand for the British currency. The pound is also liable to start feeling the pressure ahead of the weekend with the activation of Article 50 in sight.

Looking ahead to Friday weíve got a number of reports for the Eurozone to focus on.

Sturdy PMIs for the currency bloc and its major economies would be euro supportive. The only UK news will be the BBA loans for house purchase stat, which is expected to detail an increase in property lending.

As we’ve also got Canadian inflation data and US durable goods orders due for publication, USD and CAD exchange rates could be in for some movement.

Article 50 activation date sends pound lower

Although the pound began the week on a bit of a high, the currency experienced a prompt reversal of fortunes as the official date for the activation of Article 50 was announced.

Although the pound began the week on a bit of a high, the currency experienced a prompt reversal of fortunes as the official date for the activation of Article 50 was announced.

The news that Article 50 would be triggered on March 29th saw the GBP/EUR exchange rate fall from a high of  ‘1.1548 to a low of  ‘1.1476. GBP/USD also lost more than 0.3% to slide to 1.2333 while both the GBP/AUD and GBP/NZD exchange rates slumped by over 0.7%.

Wise Money Markets Roundup

Prime Minister Theresa May’s plans to activate Article 50 before the end of March have been hitting headlines for quite some time. As itís been on the horizon for a while, some industry experts had predicted that the impact of the event on the pound would be minimal. While that didn’t stop Sterling falling when the date was confirmed on Monday, the currency could recover its knee-jerk losses over the rest of the week.

Economic data was in pretty short supply on Monday, with the UK Rightmove House Price index coming in at 1.3% month-on-month and 2.3% year-on-year. German producer price data fell short of forecasts, but the report had little impact on the euro as investors instead focused on the results of the latest polls for the French election. Current forecasts put the odds of right-wing candidate Marine Le Pen winning the first round of the process at 26% (neck-and-neck with closest rival Emmanuel Macron).

Currency Forecast

Although Article 50 is likely to remain in the spotlight over the week ahead, this weekís UK inflation data and retail sales figures could help the pound return to its recent highs against peers like the euro, US dollar, Australian dollar and New Zealand dollar.

If today’s inflation data confirms that the annual Consumer Price Index pushed above the Bank of Englandís (BoE) 2% target in February, it would increase the pressure on the central bank to raise interest rates – potentially boosting the pound in the process.

Similarly, this week’s domestic retail sales numbers are expected to show a rise in year-on-year consumer spending and could lend the pound further support if the estimates prove accurate.

However, if either of these reports miss the mark, we may see the poundís decline continue in the build up to March 29th.

Other economic reports to focus on today include Canadaís retail sales data and Australiaís leading index.