Sterling
A survey of 114 British business managers, released yesterday, showed that over half of business leaders are already feeling a negative impact from last June’s Brexit vote. 58% said the referendum had caused a negative impact, while just 11% said they felt a positive impact. The survey revealed that business’ biggest concern was losing access to skilled European workers, with 54% stating that movement of skilled labour should be a priority in the UK’s trade negotiations.
A separate report, from the British Chamber of Commerce, showed that most firms are planning to hike prices in 2017 as a result of Sterling’s depreciation last year. The news unsettled Sterling traders and put the Pound on a downward path for the day.
Euro
Fears that French far-right National Front candidate Marine Le Pen could challenge for the French Presidency in this year’s election appeared to weigh on the single currency yesterday.
The Euro also suffered during the afternoon when European Central Bank President Mario Draghi talked down hopes of an early end to the bank’s expansive quantitative easing scheme, hinting that the QE programme was actually more likely to be extended or expanded if inflation pressures were to recede. The news softened the appeal of the single currency because some analysts saw it as a sign that ECB QE would probably be extended into 2018. The central bank currently plans to conclude the scheme at the end of 2017.
US Dollar
The Pound to US Dollar exchange rate softened a little bit yesterday as the Brexit bite set in again.
Later in the afternoon John Bercow, Speaker of the House of Commons, effectively banned President Trump from speaking in parliament. The Speaker cited grounds of racism and sexism’ for not inviting Trump to address the House of Commons as part of an official state visit that 1.8 million Britons signed a petition in order to prevent. Bercow noted that he was not in a position to stop the US President visiting Britain, but asserted that an address to the Westminster Hall was an ‘earned honour’ not an ‘automatic right’.
Canadian Dollar
Sterling rallied by around a cent versus the Canadian Dollar yesterday as oil prices slipped on concerns that US crude output was rising and could start to plug the gap left by last year’s OPEC and non-OPEC production cut deal. The ‘Loonie’ is susceptible to shifts in the oil market because crude is the nation’s most lucrative export.
Australian Dollar
The Pound to Australian Dollar exchange rate zigzagged yesterday as traders fretted that the Reserve Bank of Australia could launch a series of rate cuts in 2017. The risk-sensitive ‘Aussie’ was also hurt by a slowdown in Chinese private sector output, which was seen to subtly reduce trade prospects between the two nations. The Chinese Caixin composite PMI printed at 52.2 in January, down from 53.5 previously.
New Zealand Dollar
Sterling flatlined against the New Zealand Dollar yesterday ahead of today’s key New Zealand dairy auction. Prices rose 0.6% at the most recent auction and we could see the ‘Kiwi’ Dollar tick higher if demand for the nation’s largest export continues to drive prices upwards.
Data Released
12:00 NZD Dairy Auction Avg. Winning Price MT (FEB 07) Medium $3517