Posts belonging to Category eurozone



Pound Gains on news from Brexit Hearing

 

Yesterday the pound pushed higher in early trading following confirmation that UK inflation rose 0.2% in September against an expectation of 0.1% and pushing the year on year number to 1.0%.

Yesterday the pound pushed higher in early trading following confirmation that UK inflation rose 0.2% in September against an expectation of 0.1% and pushing the year on year number to 1.0%.

Later in the day further Brexit uncertainties actually played in the pounds favour. News from a hearing in the High Court indicated that the Brexit process was likely to be subject to ratification in parliament.

Although any vote is likely to take place after Article 50 is triggered it still leans the markets towards a softer Brexit and hence boosted the pound.

Wise Money Market News

Today the key focus will be on UK labour market data and with the economy resilient to the Brexit vote it is expected that the unemployment rate and earnings will remain unchanged at 4.9% and 2.1% respectively.

Later focus will turn to the US with housing market data due for release and set to follow a positive trend. In addition, we also have several Federal Reserve members speaking and their views will be scrutinized given a December rate hike is in the balance.

Later tonight we have the third and final presidential debate with Clinton currently ahead in the polls.

Pound soft as consumer optimism slides

UK retail data yesterday gave the Pound a boost after suggesting consumer spending was weathering the storm of strong inflation and weak wage growth.

UK retail data yesterday gave the Pound a boost after suggesting consumer spending was weathering the storm of strong inflation and weak wage growth.

 

The pound was largely on strong form yesterday after the latest retail data from the Confederation of British Industry (CBI) suggested consumer spending continues to hold up well.

Retail sales grew at the fastest pace in three months during July, with increased demand for summer clothing and groceries helping boost the retail sales index from 12 to 22.

However, CBI Head of Economic Intelligence, Anna Leach warned that the underlying factors keeping growth strong were ‘shaky’.

GBP/EUR was able to post a solid rise after a stellar performance from the latest US economic data pushed USD sharply higher across the board.

A preliminary estimate for US durable goods orders growth during July clocked in at an impressive 6.5% – well above the 3.9% forecast.

The previous month’s decline was revised to just -0.1%, after having been originally reported as a -1.1% fall.

Then, the advance goods trade deficit was shown to have narrowed to -US$63.9 billion, against forecasts of a smaller improvement to -US$65.5 billion.

GBP/USD also slipped lower on the latest US dollar strength, although the pound was able to retain more of its strength in the face of the charging USD than most major currencies.

Policymakers sounded less confident on inflation, however, pushing down the odds that they will hike interest rates again this year.

Wise Money Market News

The only UK data on the calendar today has already been released; GfK consumer confidence figures were published at midnight.

GBP exchange rates are therefore likely to trend at the mercy of Eurozone and US developments, thanks to the key data scheduled for release.

German consumer price index figures for July will further add to the debate over Eurozone monetary policy.

Inflation is expected to hold steady on the month, which isn’t a terrible result, but is far from the concrete evidence of increasing price growth that markets and the European Central Bank (ECB) wants to see.

Shortly after that, US second-quarter GDP figures are released.

Expectations are for an acceleration in year-on-year expansion from 1.4% to 2.6% which, taken together with yesterday’s strong data, is likely to significantly lift the odds of an interest rate hike in December, even after the Fed’s recent caution on inflation.

Pound reels as UK left with hung parliament

Is there further for the pound to fall?

Is there further for the pound to fall?

The UK took to the polls yesterday in GE2017 and it is fairly safe to say that Prime Minister Theresa May didn’t get the result she was hoping for.

The pound was left reeling as the votes were calculated and the Conservatives fell short of the 326 seats required for a majority.

The fallout from the election will be the driving force behind GBP exchange rate movement over the rest of the day.

The pound surged back in April when PM Theresa May called the snap election on the widely held belief that the Conservatives would storm their way to an increased majority.

Bets that a landslide victory would strengthen Theresa May’s hand in Brexit negotiations initially kept the pound elevated, but the currency started losing ground as a rocky campaign left her victory in doubt.

GBP exchange rates dropped 2% as last night’s exit polls pointed to a hung parliament, and this time the polls proved accurate.

While these movements are hardly as dramatic as seen following the EU referendum last year, there could be further shifts on the horizon.

With the Conservatives failing to secure the required majority, the UK’s political landscape looks murkier than ever.

If Theresa May listens to calls for her resignation the situation will be even more tenuous with only days left until Brexit negotiations are due to commence.

Wise Money markets ahead

The fallout from the election will be the driving force behind GBP exchange rate movement over the rest of the day, with any shocking announcements (like Theresa May’s resignation) having the potential to extend the pound’s losses.

However, a rapid turnaround in coalition talks and the quick establishment of a working government could help the pound recover.

Although the UK is set to publish industrial/manufacturing production, construction output, trade and growth figures, the data is unlikely to have an impact with eyes so firmly focused on the outcome of yesterday’s historic vote.

 

 

 

Election jitters continue to grip pound

Unsurprisingly, the pound had election poll results to contend with yesterday.

 

Unsurprisingly, the pound had election poll results to contend with yesterday.

The pound has once again become a politically-correlated currency, following developments in election polls over economic data.

As a result, sterling continued to trend around its multi-week lows yesterday against many of its peers.

While the currency markets are scared by the latest UK election surveys, they’re not necessarily convinced.

According to a poll by Survation, the Conservative Party were only one point ahead of the Labour Party, while YouGov’s seat-by-seat projections were now indicating the Tories could end up 22 seats short of a majority.

The polls are causing much confusion.

While Survation’s poll puts the candidates neck-and-neck, the results are weighted according to whether or not the voters themselves say they are likely to actually go to the ballots.

Other surveys, which weight their findings based upon average turnouts for the respondent’s age or social group, for example, find differently.

So, while the currency markets are scared by the latest UK election surveys, they’re not necessarily convinced.

GBP/EUR declined even though, from a broader point of view, the euro wasn’t doing particularly well itself.

Data from the Eurozone was mixed, with retail PMIs weakening for Germany, Italy and the Eurozone as a whole, but strengthening in France. The German construction PMI also rose, while the Sentix investor confidence index beat predictions for June and Eurozone retail sales volumes outpaced estimates at 2.5%.

Weakness in the pound was the only thing that allowed the US dollar to make any gains, pushing GBP/USD marginally lower. Big things are happening in the US as well as the UK, so the currency markets were holding their breath for Thursday’s developments.

Today is the calm before a triple-whammy storm on Thursday, which is likely to see the pound stagnating against most of the major currencies.

An approaching election might be dragging force on sterling, but with other high-profile global happenings on the calendar, GBP could be afforded something of a reprieve.

 

 

 

 

GBP set for volatility with inflation, wage data and election manifestos ahead

The pound flopped towards the end of last week as the Bank of England (BoE) soundly squashed hopes of a near term interest rate increase.

The pound flopped towards the end of last week as the Bank of England (BoE) soundly squashed hopes of a near term interest rate increase.

GBP/EUR fell from a high of €1.1923 to a low of €1.1781 last week, GBP/USD eased from $1.2983 to $1.2848, GBP/AUD dipped from AU$1.7643 to AU$1.7362, GBP/NZD fluctuated between NZ$1.8614 and NZ$1.8949 and GBP/CAD slid from C$1.7805 to C$1.7606.

Pound volatility can be expected if the manifestos have any impact on which party dominates in the latest polls.

 

 

Wise Money market roundup

Comparatively sturdy UK growth and climbing inflation had supported the hope that the BoE might be contemplating raising borrowing costs sooner than previously expected. However, Thursday’s BoE interest rate decision soundly kicked such projections into touch.

While the central bank was relatively optimistic about the UK’s outlook, the odds of any changes being made to interest rates before 2019 appears slim. Demand for the pound fell as only one member of the Monetary Policy Committee (MPC) voted to increase interest rates and Sterling failed to recover before the weekend.

The euro, meanwhile, received a shot in the arm from Germany’s Q1 growth data. GDP in the Eurozone’s largest economy came in at 0.6% in the first three months of 2017 – making it the best performing G7 economy.

It wasn’t such good news from the US however, with disappointing retail sales figures limiting Sterling’s losses against the US dollar.

What’s coming up money wise?

Whether or not the pound is able to recoup last week’s losses largely depends on how some of this week’s high-ticket items on the UK’s economic calendar turn out.

With inflation, employment, wage growth and retail sales stats all due for release over the next few days, GBP exchange rates could be in for a rocky ride.

The pound may fall if the reports show spiking consumer price pressures and stagnant wage growth as such a scenario is likely to inhibit spending and weigh on the UK’s all-important services sector in the months ahead.

However, economic news will be vying for attention with political developments this week as party manifestos are published ahead of the 8th June general election.

Labour’s manifesto was leaked last week and the Conservatives’ own plans are likely to come under equal scrutiny. Pound volatility can be expected if the manifestos have any impact on which party dominates in the latest polls. GBP exchange rates could fall if Conservative support falters as the prospect of a Labour or coalition victory would increase the uncertainty surrounding the UK’s Brexit negotiations.

 

 

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.

 

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’.