Sterling
The Pound put on a steady performance yesterday against most of the majors on a day devoid of any significant domestic ecostats.
Reuters released a poll showing that 31 out of 35 economists questioned thought that a ‘Brexit’ would harm the UK economy and that a majority believed an exit vote would prompt the Bank of England to slash interest rates. However, the market reaction was muted because most participants filed the report in the ‘already knew that’ pigeonhole.
Today’s session sees the BoE announce its April interest rate decision. But, once again, market sensitivity is likely to be low because there is a very high chance that the bank will elect to leave rates on hold at 0.50%.
Euro
The Pound to Euro exchange rate rallied by around 60 pips yesterday as Eurozone industrial production disappointed with a monthly contraction of -0.7%.
On an annual basis production decelerated from 2.9% to 0.8%, missing forecasts of 1.3%.
The single currency also found downward pressure yesterday due to fears surrounding this morning’s Eurozone inflation report, which is tipped to see consumer prices remain in the red at -0.1%. Anything lower than that could weigh on the Euro as European Central Bank QE bets surge.
US Dollar
Sterling slumped by around -80 pips against the US Dollar yesterday as the ‘Greenback’ rallied across the board.
Data out of the United States was actually quite damming, with retail sales sliding -0.3% unexpectedly. Analysts had been primed for a slender +0.1% expansion and subsequently Federal Reserve rate hike bets were cut. Not many investors were still holding out for an April hike before the retail report, and even less are in light of the soft consumption numbers. The US Dollar, however, was able to come through the day not just unscathed but stronger than it began. This is probably due to the expectation that this afternoon’s US CPI report will show a 1.1% rise in price pressures during March.
Canadian Dollar
The Pound to Canadian Dollar exchange rate touched a fresh 15-month low yesterday, even though crude oil prices plunged on news of US crude inventories rising by 10 million barrels last week. It seems that the ‘Loonie’ garnered support from hawkish traders who were happy to hear policymakers at the Bank of Canada speak of stronger-than-anticipated domestic growth as a reason not to consider loosening policy further in the near term.
Australian Dollar
Sterling struggled to make any inroads against the Australian Dollar yesterday as surging Chinese exports bolstered sentiment in the Asia-Pacific region. Exports rose 11.5% in March and subsequently some investors altered their positions to reflect the possibility that the Chinese Dragon may not be experiencing as hard a landing as many analysts are suggesting. China is the largest buyer of Australian produce so any positive Chinese economic reports are often viewed as bullish for the ‘Aussie’ Dollar.
New Zealand Dollar
The Pound to New Zealand Dollar exchange rate remained fairly flat on the day yesterday as upbeat Chinese data boosted local sentiment but broad US Dollar strength weighed on the ‘Kiwi’, thus helping GBP/NZD pare its losses.
Data Released
10:00 EUR Eurozone Consumer Price Index (YoY) (MAR F) Medium -0.1%
12:00 GBP Bank of England Rate Decision (APR 14) High 0.50%
13:30 USD Consumer Price Index (YoY) (MAR) High 1.1%