Sterling
The Pound continued to tick higher versus the majors on Friday as investors adjusted their bets for UK monetary policy following the Bank of England’s less-dovish-than-expected minutes report on Thursday.
The BoE is not expected to start raising interest rates anytime soon but because the latest communiqué did not feature any significant hints that policymakers are considering reducing borrowing costs, sentiment towards Sterling got a little bit rosier.
Euro
The Pound to Euro exchange rate rallied by around half a cent on Friday thanks to dovish remarks from senior European Central Bank policymaker Peter Praet.
Praet defended the central bank’s recent shift in monetary stimulus away from cutting interest rates by stating that its policy toolbox was far from depleted. Investors were especially interested in Praet’s mention of helicopter money – a form of fiscal stimulus whereby each citizen is handed a basic income regardless of employment status. The idea of the ECB handing out free cash to the people of Europe spooked traders and demand for the single currency floundered in response.
US Dollar
‘Cable’ strengthened to a monthly high on Friday as soft US consumer confidence data put extra pressure on the US Dollar.
The ‘Greenback’ has plunged four cents against the Pound since Wednesday evening when the Federal Reserve reduced its policy outlook to suggest that rates would be raised 50 basis points in 2016, down from 100 basis points previously.
A report from the University of Michigan on Friday showing that its index of consumer confidence softened from 91.7 to 90.0 in February further exacerbated the downturn in demand for the Dollar. Rising gas prices and fears regarding the upcoming general election were cited by respondents as the primary concerns going forward.
Canadian Dollar
Sterling appreciated by around half a cent against the Canadian Dollar on Friday as domestic data weighed on the ‘Loonie’.
Canadian inflation stuttered in February, slowing from 2.0% to 1.4% and undershooting analysts’ expectations of 1.5%. The cooling of consumer prices was linked to steep declines in energy and gasoline prices, which has overshadowed sturdy rises in food prices.
Canadian retail sales smashed expectations of 0.6% with a robust print of 2.1% but the result did little to impact price fluctuations in GBP/CAD.
Australian Dollar
Enhanced Sterling sentiment sent the Pound to Australian Dollar exchange rate higher by around a cent and a half. It was only on Thursday morning that we saw GBP/AUD strike a 14-month low but since then Sterling has jumped in value by over 300 pips in reaction to the BoE’s minutes report, which featured little hint of interest rates being slashed anytime soon.
New Zealand Dollar
The Pound raced ahead against the New Zealand Dollar by around 150 pips on Friday as reduced BoE rate cut bets allowed Sterling to recoup some of its recent losses.
Data Released
14:00 USD Existing Home Sales (MoM) (FEB) Medium -2.4%