Sterling
Decreased ‘Brexit’ bets breathed life into Sterling on Friday, allowing the Pound to appreciate across the board.
Number Cruncher Politics’ (NCP) latest polling data gave only a 20% chance of Britons voting to leave the EU in June’s crucial referendum. NCP collates data from different polling companies and weighs it against the historical performance of each pollster in order to calculate its forecasts. NCP is famed for predicting the polling failure in the run-up to the Conservatives landslide victory at the 2015 general election and subsequently investors reacted positively to the report.
Euro
The Pound to Euro exchange rate surged 150 pips on Friday as the relatively small odds given in NCP’s report bolstered economic confidence in Britain and helped lift the Pound.
Across the channel in the Eurozone sentiment was hurt by a series of underwhelming private sector PMI reports. Weak manufacturing output in France was accompanied by a slowdown in German factory output and service sector activity, which ultimately saw the continent composite undershoot expectations of 53.3 with a score of 53.0.
The single currency also struggled over the weekend in reaction to comments from European Central Bank policymaker Ewald Nowotny stating that negative rates are necessary in the Eurozone in order to stave of deflation.
US Dollar
Sterling strengthened by around 80 pips to strike a new three-week high against the US Dollar on Friday as softening ‘Brexit’ bets allowed the Pound to flourish while downbeat US factory output data weighed on the ‘Greenback’.
The US manufacturing PMI index printed at its worst level since 2009 on Friday, sliding from 51.5 to 50.8. Production volumes stagnated, new business growth slowed and hiring numbers plunged significantly. The terrible figures continued a wave of underperforming US ecostats and subsequently the US Dollar suffered as investors pushed Federal Reserve interest rate hikes into the third quarter.
Canadian Dollar
The Pound’s early gains against the Canadian Dollar were erased on Friday afternoon following the publication of some decent domestic data in Canada.
Canadian retail sales smashed forecasts of a -0.8% dip with a +0.4% expansion and sentiment was also boosted by a massive unexpected jump in monthly consumer prices. The monthly CPI figure leaped from 0.2% to 1.3%, which softened Bank of Canada rate cut projections and helped bring the headline inflation rate to 1.3%.
Australian Dollar
The Pound to Australian Dollar exchange rate strengthened by around 250 pips on Friday as ‘Brexit’ bets subsided. GBP/AUD struck its highest level for a fortnight when markets reopened for this week’s session as investors piled back into the UK currency in reaction to the NCP’s 20% chance of a ‘Brexit’ forecast.
New Zealand Dollar
Sterling appreciated by over three cents on Friday as British economic sentiment surged. The ‘Brexit’ related boost in confidence allowed the Pound to hit its highest level against the ‘Kiwi’ since the end of March.