Sterling
Sterling remained strong against the majority of its most-traded currency peers yesterday as optimism that Britons would not vote to leave the EU continued to bolster the appeal of the Pound.
‘Brexit’ bets softened considerably at the end of last week’s session in response to a poll suggesting that there is an 80% chance of Britain remaining in the European Union. And economic sentiment continued to increase over the weekend as traders reacted to US President Barack Obama’s comments on the referendum. Obama advised Britons to vote to stay in the EU and noted that it could take ten years for the UK to agree a new trade deal with the US. Analyst said that Obama’s statement may help persuade those sitting on the fence to side with the REMAIN camp.
Euro
The Pound to Euro exchange rate touched a new 40-day high yesterday as economic confidence improved in the UK due to reduced ‘Brexit’ bets.
There are no key British or European ecostats on the calendar today, but later in the week GBP/EUR trading patterns will likely be effected by Wednesday’s UK GDP report and Friday’s Eurozone growth figures. Last time out British growth came in at 0.6% and the Eurozone economy expanded 0.3%. This time around both GDP reports are expected to print at 0.4%, marking a deceleration in the UK and an acceleration of output across the channel. If the figures match the consensus then it is the single currency that is likely to benefit.
US Dollar
Sterling appreciated by around 70 pips against the US Dollar yesterday, temporarily rallying above key resistance to reach a new two-month high.
The recent run of poor results for US economic releases continued yesterday when new home sales contracted -1.5%, confounding expectations of +2.0%. And the Pound could register more gains against the ‘Greenback’ if any of this afternoon’s data prints also disappoint. On the docket we have US durable goods orders, US service sector PMI and US consumer confidence.
Canadian Dollar
The Canadian Dollar weakened by around a cent against the Pound yesterday as sliding oil prices weighed on the commodity sensitive ‘Loonie’.
Oil futures declined as signs of enhanced production hit the newswires. Kuwait continued to get back to speed after its recent workers’ strike, Iraqi production is climbing and Saudi Arabia is almost ready to complete the expansion of a major oilfield. The news prompted jittery investors to sell the Canadian Dollar.
Australian Dollar
The Pound to Australian Dollar exchange rate strengthened by around a cent yesterday to follow up Sterling’s significant gains during Friday’s session. After months of depreciation in response to rising ‘Brexit’ risks, it is only natural to see GBP rally across the board now that reports are starting to suggest the majority of Britons will vote to remain in the EU this June.
New Zealand Dollar
Sterling drifted higher by around half a cent against the New Zealand Dollar yesterday, marking a relatively mild daily gain in a currency pair that traders are accustomed to seeing fluctuate 200 pips at a time. Later this evening data is tipped to show that Wellington’s budget surplus widened by NZ$401 million last month, which could give the ‘Kiwi’ a leg-up.
Data Released
13:30 USD Durable Goods Orders (MAR P) High 1.9%
14:45 USD Markit US Services PMI (APR P) Medium 52.0
15:00 USD Consumer Confidence (APR) High 96.0
23:45 NZD Trade Balance (New Zealand dollars) (MAR) Medium 401m