Posts belonging to Category Sterling



Strong UK Q4 outlook boosts pound after Thursday tumble

Sterling bounced back on Friday, shored up by a strong reading from the latest services sector data.

Sterling bounced back on Friday, shored up by a strong reading from the latest services sector data.

The Pound starts this week on soft footing. GBP/EUR is currently flat at €1.1264, while GBP/USD is inching higher in the region of US$1.3083. GBP/AUD is also flat at A$1.7090, although GBP/NZD has climbed half a percent to NZ$1.8995. GBP/CAD is stagnant at C$1.6686.

The October services PMI followed the pattern of the week’s earlier manufacturing and construction indices to show a strong uptake in the rate of growth.

The pound was rebounding on Friday after having slumped on Thursday following a disappointing set of meeting minutes to accompany the Bank of England’s (BoE) rate hike.

The October services PMI followed the pattern of the week’s earlier manufacturing and construction indices to show a strong uptake in the rate of growth. Although economists warned that business confidence was still falling and that more inflation was in the pipeline, markets were cheered after the index jumped from 54.1 to 55.8.

The euro, meanwhile, was left on uncertain form as political tensions in Spain unsettled markets. Eight members of the now-deposed Catalonian government were remanded in custody. Spanish prosecutors are seeking a European arrest warrant for the region’s Prime Minister, Carles Puigdemont, who fled after declaring independence in response to Spanish threats of imposing direct rule.

President Donald Trump announced that he was appointing Jerome Powell to be the new Chair of the Federal Reserve in 2018 when Janet Yellen’s term expires. This was a safe pick from a market point of view, so the US dollar was largely unmoved by the announcement. On top of this, the latest labour data provided little reason to either buy or sell the US dollar.

Job creation was respectable but significantly under forecast and wage growth figures disappointed. This wasn’t enough to soften the enormous odds of a rate hike next month, but neither was it particularly encouraging.

Wise Money Market News

There was no notable data on the UK calendar today, leaving markets to focus on the long-term monetary policy outlook and dwell on the potential fallout of Brexit.

More finalised Eurozone PMIs, as well as investor confidence data, are set for release later. Individually, each of these low-impact releases is unlikely to cause much euro volatility, but the volume of data could serve to reinforce or undermine the overall picture of the Eurozone economy as one that is enjoying a robust recovery.

There is little on the US data calendar today; although the speeches of Federal Reserve officials Potter and Dudley will be of interest to the market, they are unlikely to provide significant support or damage to the prospect of a rate hike next month.

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 soars on upbeat Bank of England comments

An optimistic set of monetary policy meeting minutes released by the Bank of England (BoE) yesterday at the conclusion of its latest gathering lit a fire under the pound.

An optimistic set of monetary policy meeting minutes released by the Bank of England (BoE) yesterday at the conclusion of its latest gathering lit a fire under the pound.

After making gains in the region of 1% versus all of its major peers, Sterling continues to see strong demand today. GBP/EUR is currently up 0.3% at €1.1268, with GBP/USD having risen by a commensurate amount to US$1.3438. GBP/AUD is performing slightly better, with gains of 0.4% taking the pairing to A$1.6805, although GBP/NZD has only moved up 0.1% to NZ$1.8545. GBP/CAD has risen in line with other pound pairings to strike C$1.6349.

Provided economic data continues to clock in broadly in line with the new trend, the minutes stated, the bank is likely to raise interest rates faster than the market is currently expecting.

On the face of it, the latest BoE Monetary Policy Committee (MPC) meeting seemed fairly pedestrian. No changes were made to interest rates or quantitative easing, and only the two usual suspects – Ian McCafferty and Michael Saunders – pushed for the committee to raise borrowing costs.

However, the meeting minutes revealed that the bank saw the UK economy as outperforming the forecasts set out in its latest Inflation Report, which was released in August. Provided economic data continues to clock in broadly in line with the new trend, the minutes stated, the bank is likely to raise interest rates faster than the market is currently expecting.

With some analysts suggesting that this may mean that the BoE hikes interest rates as soon as November, demand for the pound swelled.

Although the euro was unable to resist the pound’s advances, it is finding support elsewhere thanks to comments from European Central Bank (ECB) policymaker Bostjan Jazbec, who calmed fears that the central bank would react to stronger euro exchange rates by intervening to weaken the currency.

US dollar also found strong support yesterday, thanks to above forecast inflation data. The consumer price index rose 1.9% in August – an above forecast result that saw markets beginning to hope once again that there may be a third interest rate hike from the Federal Reserve this year.

Wise Money Market News

There is nothing on the UK data calendar today, but the pound is likely to remain in strong form as the aftermath of yesterday’s Bank of England meeting continues to have a positive effect.

It’s a quiet day for Eurozone data, with only the trade balance figures for July and labour costs for the second quarter set for release soon.

According to forecasts, the latest US data is likely to take the shine off yesterday’s strong inflation figures. Advanced retail sales growth is expected to have slowed in August, while University of Michigan confidence index is predicted to fall. This further improves the likelihood that the pound will be able to hold on to its gains during today’s session and end the week on a high note.

Pound stabilises above post-election lows, political uncertainty reigns supreme

After falling in reaction to the outcome of Thursday’s general election, the pound is beginning the week in a more stable position.

After falling in reaction to the outcome of Thursday’s general election, the pound is beginning the week in a more stable position.

The GBP/USD exchange rate is also likely to stumble on Wednesday, with the Federal Reserve expected to increase interest rates at its latest policy gathering.

When PM Theresa May called for a snap election back in April her campaign hinged on the promise of maintaining strength and stability during the UK’s Brexit negotiations.

However, it’s fairly safe to say that her ability to deliver on that promise is now in question, with Thursday’s vote leaving the nation more mired in uncertainty than ever.

The Conservatives succeeded in losing their majority, a result which is unlikely to strengthen Theresa May’s hand in exit talks.

May has so far resisted calls for her resignation but the prospect of a minority government backed by the DUP is currently failing to excite much confidence in the government’s ability to secure a good deal for Britain.

While the pound has now stabilised following Friday’s sell off, it remains at multi-week and multi-month lows against the major currencies.

Wise Money markets ahead

With no potentially exciting economic reports on the calendar for today, the fallout from last week’s vote will remain the main driver of GBP exchange rate movement.

If the outcome of the election leads to the pursuit of a ‘soft Brexit’ (where the UK retains access to the single market) the pound could ultimately benefit.

However, if it appears that those members of the Conservative party pushing for a complete severing of the UK’s relationship with the EU are more likely to get their way now that May has lost her majority, the pound could be headed for new lows over the next few weeks.

In light of everything that has happened/is happening, tomorrow’s UK inflation stats may prove less influential than usual.

That being said, the pound could come under further pressure if the rate of inflation eases.

Although the odds of the Bank of England (BoE) reconsidering its current stance on interest rates are minimal (especially in the face of such political uncertainty) easing consumer price pressures would certainly add to the argument in favour of keeping borrowing costs lower for longer.

The GBP/USD exchange rate is also likely to stumble on Wednesday, with the Federal Reserve expected to increase interest rates at its latest policy gathering.

 

 

 

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.

 

 

 

 

Little on European markets but potential big day for the GBPUSD pair

The key event of yesterday the June ECB meeting had little effect on wise money markets.

The key event of yesterday the June ECB meeting had little effect on wise money markets.

Mario Draghi continued to put emphasis on the ECB standing ready to input more Quantitative easing, if deemed necessary.

Markets had little reaction as this is considered old news at this stage and as a result, there was no major direct influence on the Euro. Most of yesterday was generally fairly quiet in terms of other Euro data, or rather lack of.

Looking at the main Euro pairs over the last 24 hours, they’ve been trading in tight ranges and only differ slightly from yesterday’s open.

This is relatively calming following the yoyo-like movements we’ve previously been seeing due to Brexit uncertainty and the changing sentiment polls.

It looks like EURUSD is on its way back down from its early May rally and most of the majors are looking a little worse off than a couple of weeks ago.

 

Wise Money awaiting US Non-Farm Payroll figures

 

Looking ahead at the dollar, today we have the US Non-Farm Payroll figures for May due for release at 13:30.

Following the Fed’s preconditions of a rate hike being dependent on a continuing improvement in the labour market, these figures are likely to be watched very closely.

If today’s figure is close to the forecast (164,000), it should strengthen expectation for a Fed rate hike through the coming summer months.

This could provide us with some upwards movement as we move into this weekend.

 

 

 

 

 

Pound rattled on new referendum poll

The pound dived sharply yesterday on the release of a new poll that showed a surprise lead for the leave camp.

 

The pound dived sharply yesterday on the release of a new poll that showed a surprise lead for the leave camp.

Over the last two weeks we have seen good momentum for the pound off the back of polls, suggesting the remain camp was pulling ahead.

However, it was almost inevitable that we would see a conflicting poll suggesting the opposite, and yesterday two Guardian/ICM polls showed a split of 52%-48% in favour of a Brexit.

The pound fell sharply against the USD and the euro on this news, and is continuing to struggle this morning. In the run up to polling day we are likely to see the pound pulled around significantly as conflicting polls and news drive price action.

Wise money news to come

Today the focus will continue to be on the Brexit momentum as we start the month of June.

In addition we have ISM manufacturing data from the US later today and sentiment is split on the momentum for manufacturing, and a weak number cannot be ruled out.
Elsewhere, we have substantial amounts of PMI data from the Euro area, France and Germany. The initial Euro area number came in slightly weaker, however Germany and France both showed good uplift.

The interest today will be in the periphery and the potential for the numbers here to be soft.

 

Multi week lows for GBP on prospect of hung parliament

Sterling spiralled to multi-week lows against all the major currencies at the close of last week as unexpectedly tight election polls left the outcome of June’s vote in doubt.

Sterling spiralled to multi-week lows against all the major currencies at the close of last week as unexpectedly tight election polls left the outcome of June’s vote in doubt.

GBP/EUR dropped to a two-month low of €1.1432, GBP/USD slumped to one-month low of $1.2783, GBP/AUD brushed a worst rate of AU$1.7173, GBP/NZD tumbled to a six-week low of NZ$1.8115 and GBP/CAD was left trading in the region of C$1.7201.

Political developments will continue dominating headlines (and dictating pound movement) for much of this week with the election now just over a week away.

 

Wise Money market roundup

The pound (like the rest of us) was left really feeling the need for the Bank Holiday weekend, having experienced a bit of a dismal end to the week.

The resumption of political campaigning and the publication of the latest election polls conspired to send Sterling lower across the board.

The polls showed that Conservative’s lead against Labour had plummeted from 20 to 5 in just a matter of weeks.

Concerns that the election could result in a hung parliament left the pound at multi-week lows against the euro, US dollar and Canadian dollar.

The slide in GBP/USD was also the result of positively revised US growth data as the report boosted hopes that the Federal Reserve will increase interest rates in June.

Sterling was able to recoup some losses against the euro however amid concerns that the Greek bailout negotiations could come to a grinding halt. Greek Finance Minister Euclid Tsakalotos issued a warning to the nation’s creditors – Greece would not move on to the next stage of bailout discussions without the IMF and EU agreeing to debt relief.

What’s coming up money wise?

Political developments will continue dominating headlines (and dictating pound movement) for much of this week with the election now just over a week away.

There are no UK reports set for release today, but GBP/EUR fluctuations could follow the publication of the Eurozone’s economic/industrial/services and consumer confidence figures and German inflation stats for May.

Upbeat releases could see the pound return to its weakest levels against the euro.

Meanwhile, the US will be publishing personal consumption and consumer confidence numbers.

As long as the data supports the case in favour of the Federal Reserve increasing interest rates next month, the GBP/USD exchange rate is likely to remain trading in the region of a one-month low.

 

 

 

 

Pound tumbles as BoE hints that interest rates won’t climb until 2019

Yesterday wasn’t too super for the pound, with GBP exchange rates broadly declining in the wake of the BoE’s latest interest rate decision.

Yesterday wasn’t too super for the pound, with GBP exchange rates broadly declining in the wake of the BoE’s latest interest rate decision.

GBP/EUR dropped to a low of €1.1838, GBP/USD fell from $1.2944 to $1.2853, GBP/AUD edged from AU$1.7570 to AU$1.7439, GBP/NZD closed the day at NZ$1.8839 (up from a low of NZ$1.8774) and GBP/CAD dropped from C$1.7754 to C$1.7620.

Rising inflation could pressure the BoE into reconsidering its current stance on interest rates, so a stronger-than-anticipated result may boost GBP.

 

Wise Money Market roundup

Given that there wasn’t much going on for most of the week, the spotlight was really on Thursday’s trio of Bank of England (BoE) announcements.

Although ‘Super Thursday’ is the name applied when the BoE makes its interest rate decision, releases meeting minutes and publishes its inflation report, there wasn’t much super about yesterday.

Hopes that the central bank might vote for an increase in borrowing costs in the near future were quashed when only one member of the Monetary Policy Committee (MPC) voted for an immediate adjustment.

BoE Governor Mark Carney added to the pound’s woes. When asked if the current level of stimulus being employed by the central bank is excessive, he replied; ‘The stimulus isn’t excessive, it’s appropriate, first point, and that’s the judgement of the committee.’

Bets that borrowing costs won’t change until 2019 saw the pound fall away from its recent multi-month highs against the US, Australian, New Zealand and Canadian dollars.

The day’s other UK news wasn’t so hot either, with industrial output slowing in March and the nation’s trade deficit widening.

What’s coming up money wise?

With no UK news on the calendar for today, the pound may struggle to recover yesterday’s losses before the weekend.

Today’s Eurozone news (German growth and inflation numbers) came in largely as expected, although non-seasonally adjusted Q1 year-on-year growth beat forecasts and rose to 2.9%.

The GBP/USD exchange rate could slide further this afternoon if the US inflation report shows that consumer price pressures remained above target in April.

Looking ahead to next week and the main UK news to focus on includes the nation’s inflation, employment and retail sales data.

Rising inflation could pressure the BoE into reconsidering its current stance on interest rates, so a stronger-than-anticipated result may boost GBP.

A decent uptick in average earnings would also bolster the pound, as would signs that consumer spending remained strong in April.