Brexit Fears Weaken Pound Sterling Exchange Rates as Tusk Rejects Theresa May’s Trade Plan
Brexit fears were once again weighing on Pound Sterling (GBP) yesterday. The recent US steps towards protectionism sparked concerns about the UK’s ability to negotiate a beneficial free-trade deal with the United States after it has split from the European Union.
Additionally, European Council President Donald Tusk has rejected Theresa May’s framework for a post Brexit trade deal; a proposal only laid out by the Prime Minister last week following intensive talks with her Cabinet.
Unsurprisingly the Pound was on weak form versus its major peers.
Threat of Full-Blown US-EU Trade War allows GBP/EUR Exchange Rate to Hold Opening Levels
The GBP/EUR exchange rate ended the day on sluggish form yesterday, with the Euro also weighed down by market fears over a trade war with the US.
The EU has threatened to retaliate against Donald Trump’s steel and aluminium tariffs by taxing everything from Harley-Davidson motorcycles to peanut butter.
However, Trump has retorted that any action taken by the EU against US products will result in further tariffs against EU goods.
The European Central Bank (ECB) will announce its latest monetary policy decisions today. Talk of changes to the quantitative easing programme could boost the Euro.
GBP/USD Weakens as Strong Jobs Data Cushions Blow of Cohn Resignation
The US Dollar was largely on soft form yesterday, although some impressive labour market data meant the GBP/USD exchange rate slipped marginally lower during the day.
Markets were unsettled by news that Donald Trump’s top economic adviser Gary Cohn had resigned, removing an influential pro-free-trade voice from the current administration.
This negativity was somewhat counteracted by the latest ADP employment change report for February, which showed a significantly higher-than-expected 235,000 additional people were employed last month.
US initial and continuing jobless claims figures could give the US Dollar a boost today if they show a low number of people making out-of-work claims.
GBP/CAD Dips despite BOC Signalling Trade War Fears could Freeze Interest Rates
Despite the headwinds facing the Canadian Dollar, the GBP/CAD exchange rate weakened yesterday.
The Bank of Canada (BOC) held interest rates at 1.25% as expected and signalled that uncertainty in international trading conditions was a primary reason for doing so.
The Canadian Dollar received a little support from better-than-expected fourth-quarter productivity growth and a smaller-than-anticipated international merchandise trade deficit for January.
Canadian housing starts and building permits data for February and January respectively are set for release today.
Australian Dollar Rebounds after GDP Disappointment; GBP/AUD Slumps
The GBP/AUD exchange rate slumped yesterday because the Australian Dollar was rebounding from earlier weakness on poor economic data.
Data released just after midnight showed that the Australian economy had grown slightly slower-than-expected during the final quarter of 2017, managing 0.4% quarter-on-quarter growth and 2.4% year-on-year growth. However, third-quarter figures were revised upwards and the Australian Dollar was able to rebound after the initial slump.
Strong US Jobs Data Allows GBP/NZD to Hold Opening Levels
The GBP/NZD exchange rate was flat yesterday, as trade war fears and strong US data weighed on the New Zealand Dollar. Markets were also awaiting the day’s truckometer and manufacturing data, released last night.
New Zealand card spending figures are due out tonight and could see some movement for GBP/NZD during the overnight Australasian session.