Posts belonging to Category Sterling



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’.

 

Pound lingering at multi-month highs as MPs back election

The pound racked up serious gains earlier in the week and has (so far) largely managed to hold on to them.

The pound racked up serious gains earlier in the week and has (so far) largely managed to hold on to them.

The GBP/EUR exchange rate remains above the €1.19 level, GBP/USD is clinging to six-month highs of $1.28 and GBP/CAD advanced from C$1.7199 to C$1.7285. However, GBP/AUD eased back from A$1.7100 to A$1.7020 while GBP/NZD slipped from NZ$1.8321 to NZ$1.8144.

Carney may address monetary policy, and if he indicates that UK interest rates aren’t likely to rise for some time to come the pound may give up some of this week’s gains.

Although the pound has come away from the week’s best levels, the currency remains close to the multi-month highs achieved on Tuesday.

On Wednesday MPs voted overwhelmingly to back the Prime Minister’s decision to hold a snap general election on June 8th.

The House of Commons voted 522 to 13 in favour of bringing the general election forward from 2020, with SNP MPs abstaining. As all the major parties had previously voiced their support for an early election, the news failed to shift the pound.

The UK is now bracing itself for the onslaught of yet more political campaigning, although the present pound support is coming from the expectation that the Conservatives will increase their majority after June’s vote.

In other news, the New Zealand dollar was boosted by a domestic report detailing a surge in inflation in the first quarter of the year. New Zealand’s CPI came in at 1.0% on a quarter-on-quarter basis and 2.2% year-on-year – this was up from a previous annual figure of 1.3%.

This morning’s German producer price index came in below forecast levels, at 0.0% on the month and 3.1% on the year vs. predictions of 0.2% and 3.2%.

Wise Money market data coming up

Barring any fresh political surprises, today’s session could be a comparatively calm one for the major currencies. That being said, there are a couple of economic releases to look out for.

The Eurozone’s construction output figures for February are unlikely to have much impact on the euro, but the region’s consumer confidence gauge may prove more influential. The measure of sentiment is believed to have improved slightly from -5 to -4.8 in April.

However, with concerns about the outcome of the upcoming French election mounting, the index may actually register a dip in confidence – and such a result could weaken the euro.

We’ve also got a speech from Bank of England (BoE) Governor Mark Carney ahead. Carney may address monetary policy, and if he indicates that UK interest rates aren’t likely to rise for some time to come the pound may give up some of this week’s gains.

As the day’s US news (initial jobless claims/continuing jobless claims figures and the nation’s leading indicators report for March) isn’t the most market-moving, the US dollar could continue reacting to geopolitical tensions.

 

 

 

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.

 

French election fears leave euro weaker, UK inflation ahead

After dipping at the tail end of last week, the pound spent Monday recovering losses.

After dipping at the tail end of last week, the pound spent Monday recovering losses.

The GBP/EUR exchange rate firmed from €1.1705 to €1.1738, GBP/USD climbed from $1.2388 to $1.2429 and GBP/NZD bounced back from NZ$1.7825 to NZ$1.7886.
GBP/AUD spent the day fluctuating between AU$1.6539 and AU$1.6583, but GBP/CAD closed Monday slightly lower as oil prices spiked.
The pound was able to start the week fairly strongly, recouping recent losses despite a report revealing a sharp decline in credit card spending. The data, which was published by Visa, showed that monthly spending patterns dipped in March.
However, while the report hinted at a slowdown in consumer activity, expectations that today’s UK Consumer Price Index will show that inflation remained above the Bank of England’s 2% target in March helped the pound advance. While growing price pressures and stagnant wage growth could restrain consumer spending, higher inflation might encourage the BoE to hike interest rates sooner than forecast, so a strong inflation result today could see the pound extend yesterday’s gains.

The rise in GBP/EUR was also the result of mounting fears about the French election. With two of the top three candidates having an anti-EU stance (far-left candidate Jean-Luc Melenchon has now taken third place), the euro is likely to remain under pressure as the first round of voting approaches.

Wise Money markets data coming up

While today’s UK inflation data is liable to be the main mover of pound exchange rates, news from the Eurozone could also have an impact on GBP/EUR.
ZEW research centre is set to publish its Economic Sentiment surveys for Germany and the Eurozone.
The German index is believed to have jumped from 12.8 to 14.8 in April, a result which could give the euro a boost.
If the Eurozone measure also shows an increase in confidence, and the German gauge of the current situation improves as anticipated, the euro may be able to limit the pound’s gains in the event of a stronger-than-anticipated UK CPI reading.
As it stands, UK inflation is expected to come in at 0.3% on the month (down from 0.7% MoM in February) and 2.3% on the year.
Core inflation is believed to have eased from 2.0% to 1.9%.
It would take an above-forecast result to really bolster BoE interest rate hike expectations, so the pound could spend the day drifting lower if inflation falls short.

Euro runs into trouble as ECB dismisses idea of policy change

After a mixed day of trading the GBP/EUR exchange rate managed to just about hold €1.17 (although this was largely due to euro weakness).

After a mixed day of trading the GBP/EUR exchange rate managed to just about hold €1.17 (although this was largely due to euro weakness).

GBP/USD failed to climb back above the $1.25 level and GBP/NZD slid from its 2017 high, but GBP/AUD did push from AU$1.6471 to AU$1.6559.
Meanwhile, a one-month high for oil prices drove GBP/CAD from C$1.6793 to a low of C$1.6682.
A widening deficit or a slower pace of domestic growth may counter any positive impact from the production numbers.
The UK’s economic calendar was empty yesterday, leaving the pound to move at the mercy of external events.
GBP sentiment was solid mid-week thanks to the UK’s impressive service sector report, but concerns about overall growth slowing in the first quarter of 2017 left the pound fluctuating as the weekend approached.
Sterling was eventually able to march higher against the euro however as officials from the European Central Bank (ECB) indicated that the institution is happy with current monetary policy and has no plans to either taper quantitative easing or increase interest rates in the near future.
Draghi left the euro struggling when he stated; ‘We are confident that our policy is working and that the outlook for the economy is gradually improving. But even so, we have not yet seen sufficient evidence to materially alter our assessment of the inflation outlook – which remains conditional on a very substantial degree of monetary accommodation. Hence a reassessment of the current monetary policy stance is not warranted at this stage.’

ECB Vice President Vítor Constâncio and Executive Board Member Peter Praet supported the view that borrowing costs aren’t likely to be altered any time soon. As well as dipping against the pound, the euro fell to a low of 1.0627 against the US dollar.

Wise Money markets data coming up

Before we kick back for the weekend we could see a final flurry of pound movement thanks to the UK’s industrial and manufacturing production numbers. Both measures have been forecast to show growth in February – a result that could be pound positive.
However, the day’s UK trade data and NIESR GDP estimate for March may limit pound gains if they show a widening deficit or a slower pace of domestic growth.
A speech from Bank of England (BoE) Governor Mark Carney is also on the horizon and his tone on the subject of interest rates could be key to how the pound closes out the week. Hints of a rate hike could send the pound soaring, but indications that rates are going to remain on hold for the foreseeable future would be negative for GBP.
There’s also some high-profile US news to focus on, in the form of the nation’s non-farm payrolls report. As solid growth in the labour market might convince the Federal Reserve that more than three rate hikes will be necessary in 2017, the US dollar could stop the pound breaching $1.25 if the NFP report exceeds expectations.
Finally, GBP/CAD volatility may follow the publication of Canada’s own jobs data. The unemployment rate is believed to have increased in March and (if that proves to be the case) the pound could close out the week trading higher against the Canadian dollar.

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.