Headlines
BoE’s Carney assuages rate cut fear
s – Pound jumps on rate hike comments.
Greece hands over reform plan
– Predicts €3bn increase in state revenue.
GBP/USD up on softer US GDP
– Q4 growth undershoots expectations.
Sterling strengthens 250 pips vs. ‘Loonie’
– Oil prices down on the day.
Sterling
The Pound rallied against its major currency rivals on Friday in reaction to comments from Bank of England Governor Mark Carney indicating, as he has maintained since this time last year, that the next move in interest rates would be up. The Governor’s comments assuaged fears, stemming from remarks made by BoE chief economist Andy Haldane a week previously, that the UK’s soft inflationary outlook could persuade policymakers to loosen monetary policy further.
Indeed, the bank’s deputy Governor, Ben Broadbent, also weighed in with positive rhetoric suggesting that rates would begin to rise as wage increases and enhanced consumer spending trends helped to drive the British consumer price index higher through the second half of the year.
Euro
Sterling increased in value against the single currency by around 100 pips on Friday morning as investors reacted to BoE Governor Mark Carney’s comments on the likelihood that when the bank next adjusts monetary policy interest rates will rise rather than fall.
However, the Euro clawed back most of its losses by the end of the day thanks to a development in the Greek debt negotiation saga. Markets were buoyed by news that Greece’s Syriza government had handed the EU and IMF a list of reform measures aimed at boosting state revenues by around €3 billion in 2015.
The single currency could strengthen against the Pound today if German inflation data shows, as anticipated, that price pressures accelerated from 0.1% to 0.3% in March.
US Dollar
The Pound to US Dollar exchange rate grew by around half a cent on Friday as Sterling sentiment was bolstered by BoE comments and demand for the ‘Greenback’ was hampered by a lower-than-anticipated US GDP score.
During the afternoon it was reported that, contrary to expectations of an upward revision, the American economy expanded at an annual rate of 2.2% in the fourth quarter of last year. It seems that a surge of import orders combined with reduced government spending caused growth in the world’s largest economy to slow significantly from 5.0% to less-than-half-that-much in the final three months of 2014.
Canadian Dollar
Bank of England Governor Mark Carney’s calming words on the unlikelihood of a rate cut helped drive Sterling to an impressive 250 pip daily gain against the Canadian Dollar on Friday. In addition to the BoE remarks, the ‘Loonie’ also lost ground against the Pound due to a -4% drop in value of its most lucrative export: crude oil.
Australian Dollar
sentiment dampening -4.2% drop in Chinese industrial profits set the Australian Dollar off on what would become a terrible day against the Pound. The Sterling to ‘Aussie’ Dollar exchange rate eventually succumbed to a -250 pip daily decline as fears of a rate cut from the Bank of England were assuaged by a confident statement from Governor Mark Carney. Additionally, the Antipodean currency struggled following a note from investment management company PIMCO suggesting that the Australian Dollar could weaken further through 2015.
New Zealand Dollar
The Pound rallied by around a cent against the New Zealand Dollar on Friday as markets decided that BoE Governor Mark Carney’s upbeat interest rate comments provided the perfect opportunity to take profit on the near-two-month low GBP/NZD exchange rate.
Data Released Today
09:30 GBP Mortgage Approvals (FEB)
13:00 EUR German Consumer Price Index (YoY) (MAR P)
13:30 USD Personal Consumption Expenditure Core (MoM) (FEB)