Sterling
British parliament voted 522 to 13 in favour of going to the polls on June 8, making Prime Minister Theresa May’s plans for a snap election official. The announcement had little impact on the currency market because all the major parties had previously stated their support for early elections. However, Sterling maintained most of its massive gains from Tuesday’s session, when investors bought into the Pound in the hope that the vote could strengthen Theresa May’s hand in the upcoming Brexit negotiations.
Most analysts predict the election will see the Conservative party gain a larger parliamentary majority, which should help Theresa May to silence the ‘hard Brexit’ backbenchers within the Tory party. For this reason Sterling has appreciated significantly since the news of June’s election and reached a number of multi-month highs.
Euro
Data yesterday morning confirmed that Eurozone consumer prices slowed from 2.0% to 1.5% in March, however, the print had little impact on the Pound to Euro exchange rate.
GBP/EUR remained close to four-month highs throughout the London session but profit taking took Sterling a little bit lower during the evening. It will be interesting to see whether the Pound makes another push higher over the next few days or whether traders decide Tuesday’s extravagant moves were overdone. Much will depend on Sunday’s French Presidential election first round. If the anti-EU candidates are eliminated in the first round of votes then the single currency is liable to rally, whereas the Euro could plummet if either Marine Le Pen or Jean-Luc Melenchon progress.
US Dollar
‘Cable’ remained sturdy through the London session yesterday, however, Sterling fell from six-month highs against the US Dollar during the evening as investors locked in profit from Tuesday’s robust gains.
The ‘Greenback’ remains capped by concerns that a potential conflict with North Korea could hamper the Federal Reserve’s plans for tighter policy, while sentiment has also softened since President Donald Trump voiced support for low interest rate policy and a softer domestic currency last week.
Today’s session sees Bank of England Governor Mark Carney give two speeches in Washington and we could see volatility in Sterling pairs if the UK banking chief gives any clues on domestic policy.
Canadian Dollar
The Pound to Canadian Dollar exchange rate hit its highest level since September 2016 yesterday as oil prices stuttered following new US inventory data. Markets had hoped for a 1.4 million drawdown in oil inventories last week but the actual report showed a more slender decline of 1 million, stoking fears that oversupply will remain a drag on crude prices this year. The ‘Loonie’ was negatively impacted by the report because oil is the North American nation’s largest export.
Australian Dollar
A mixture of global risk aversion, due to the threat of military action between North Korea and the US, and hopes of a better Brexit deal for the UK, due to snap elections in Britain, helped the Pound rally by around half a cent against the Australian Dollar yesterday. The positive Sterling sentiment drove GBP/AUD to a fresh three-month high, striking a peak not seen since the first week of the year.
New Zealand Dollar
The Pound remained close to its strongest exchange rate since last September against the New Zealand Dollar for most of yesterday’s session. Demand for the ‘Kiwi’ grew, however, following the evening’s New Zealand CPI report, which saw inflation rise from 1.3% to 2.2% in the first quarter of 2017. GBP/NZD softened by around 70 pips following the reading, which outpaced expectations of 2.0%.
Data Released
11:30 GBP BOE’s Carney Speaks at IIF in Washington High