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

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

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

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

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

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

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

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

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

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

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

Wise Money market data coming up

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

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

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

 

Pound returns to multi month highs before growth data

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

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

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

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

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

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

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

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

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

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

 

Wise Money market data coming up

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

 

Wise Money market data coming up

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

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

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

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

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

 

Euro holding election gains, pound recovers losses against US dollar

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

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

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

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

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

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

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

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

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

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

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

Wise Money market data coming up

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

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

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

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

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

 

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.

 

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.

 

 

 

Seven month highs for GBP on UK election news

We thought this week would be a fairly quiet one in the world of currency… how wrong we were.

We thought this week would be a fairly quiet one in the world of currency… how wrong we were.

UK Prime Minister Theresa May delivered a major bombshell on Tuesday morning when she announced the intention to hold a snap election on June 8th. The news sent shockwaves through the currency market and sent the pound to a succession of multi-week and multi-month highs.

The GBP/EUR exchange rate jumped from €1.1754 to €1.1962, GBP/USD surged from $1.2525 to $1.2856 (a six-month high), and both GBP/CAD and GBP/NZD achieved seven-month highs (of C$1.7234 and NZ$1.8287 respectively).

UK election news is likely to continue dominating headlines, and dictating pound movement, as the week progresses.

UK data releases are in pretty short supply this week, so we returned from the Easter break assuming that pound movement would be fairly minimal.

As it happened, PM Theresa May unexpectedly put a cat among the pigeons and inspired some of the pound’s best gains since the EU referendum last year.

May had previously asserted that there would be no election before 2020 so her sudden turnaround was surprising to say the least.

May stated; ‘Division in Westminster will risk our ability to make a success of Brexit and it will cause damaging uncertainty and instability to the country. So we need a general election and we need one now, because we have at this moment a one-off chance to get this done while the European Union agrees its negotiating position and before the detailed talks begin.’

At the moment it is expected that the election will see PM May gain a larger majority in parliament, an outcome which would improve the government’s ability to follow through with the aims of its Brexit negotiations.

Wise Money market data coming up

 

UK election news is likely to continue dominating headlines, and dictating pound movement, as the week progresses.

This morning’s Eurozone inflation data is unlikely to have much of an impact on the euro, given that it is forecast to confirm that the region’s CPI printed at 1.5% on the year and 0.8% on the month in March.

While the Fed’s Beige Book could inspire some GBP/USD fluctuations later in the day it would need to contain some seriously sensational information to counter the impact of this week’s UK election shocker.

We are likely to see volatility in the GBP/NZD pairing however after New Zealand publishes its inflation report for the first quarter.

Economists have forecast that inflation surged from 0.4% to 0.8% quarter-on-quarter and from 1.3% to 2.0% year-on-year.

 

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.

 

Can the pound hold gains heading into the Easter weekend?

Wednesday’s UK wage data turned out to be slightly better than forecast, so the pound enjoyed a fairly strong day of trading.

Wednesday’s UK wage data turned out to be slightly better than forecast, so the pound enjoyed a fairly strong day of trading.

 

The GBP/USD exchange rate finally pushed above the key $1.25 level (hitting a high of $1.2575). Meanwhile, GBP/EUR held €1.1750 and GBP/AUD struck a new two-month high of AU$1.6710.
GBP/NZD climbed a cent over the course of trading, pushing all the way to a seven-month best of NZ$1.8070.
The pound wasn’t able to come out on top against the Canadian dollar however, with the BoC interest rate decision leaving GBP/CAD trading in the region of C$1.6613.
The main UK causes of pound movement next week are likely to be the Rightmove House Price report and retail sales numbers for March.
Yesterday’s pound gains were largely the result of the UK’s latest jobs data showing a slightly stronger-than-forecast increase in average earnings. Average earnings including bonuses increased by 2.3% rather than the 2.2% expected. Wages excluding bonuses were up 2.2% rather than 2.1%.
However, the pound’s advances were a little timid in light of the fact that the UK added fewer positions than expected in the three months through February. The employment change of 39k was almost half the 70k job increase anticipated.
Later in the day the GBP/USD exchange rate was able to push higher as US President Donald Trump sent the US dollar reeling.
Trump asserted; ‘I think our dollar is getting too strong, and partially that’s my fault because people have confidence in me. But that’s hurting – that will hurt ultimately […] It’s very, very had to compete when you have a strong dollar and other countries are devaluing their currency.’
Hints that the US should maintain a policy of low interest rates contributed to the evaporation of demand for the US dollar and allowed higher-risk currencies (like the Australian and New Zealand dollars) to climb.

Wise Money markets data coming up

There isn’t much on the data calendar with the potential to inspire significant currency movement today, so the pound may be able to close out trading ahead of the four-day weekend in a stronger position against many of its currency rivals.
If German inflation is confirmed at 0.2% on the month and 1.5% on the year in March, GBP/EUR could firm slightly amid bets that the European Central Bank (ECB) will refrain from making any changes to monetary policy for the foreseeable future.
Similarly, GBP/USD may consolidate its position above $1.25 if the University of Michigan Confidence index dips from 96.9 to 96.6.
The main UK causes of pound movement next week are likely to be the Rightmove House Price report and retail sales numbers for March. A drop in consumer spending would be pound-negative.
Although the Eurozone is set to publish final inflation figures, consumer confidence data and preliminary services, manufacturing and composite PMIs, the euro may prove more reactive to the latest developments in the French Presidential election.
In terms of US news, the nation’s housing and industrial/manufacturing stats could be the main market-movers. Reports which support the case in favour of a June rate hike from the Fed would be US dollar supportive.