Sterling
The Pound suffered versus most of the majors yesterday as jittery traders responded to mixed poll readings, which put the Conservatives’ lead over Labour at anything from 1-point to 11-points.
The only domestic data print of the day showed that UK retail sales shrank by 0.4% in May, according to the British Retail Consortium. The BRC noted that online sales slowed to 4.3%, having expanded 13% this time last year. Rising inflation and stagnant wage growth was blamed for the underwhelming score, however, Sterling was barely moved by the numbers.
Euro
The Pound softened by around a quarter of a cent versus the Euro yesterday as political tensions continued to impact stability in the Sterling exchange rate.
Data in the Eurozone came in strongly, with the Sentix gauge of Eurozone investor morale rising to a 10-year high of 28.4 in May. Impressive scores for both the current situation and expectations for future growth took the index to levels not seen since July 2007, prior to the worst days of the global financial crisis. The single currency also benefitted from a 2.5% rise in Eurozone retail sales, which beat estimates of 2.1%.
Demand for the Euro also appears to be being propped up by expectations that the European Central Bank could soften its approach to monetary easing during its policy statement on Thursday. However, the likelihood of a serious shift in policy stance is unlikely, meaning the Euro could come under selling pressure if investors are underwhelmed by the ECB’s new message.
US Dollar
‘Cable’ touched a fresh one-week high yesterday morning, however, Sterling ended the day a little bit weaker against the US Dollar due to anxious trading conditions ahead of Thursday’s UK general election.
The ‘Greenback’ received a little bit of a leg-up from a new US labour market report signalling that employers struggled to find suitable workers in April. The JOLTS job openings figure rose 259,000 to an all-time high of six million, while hiring decreased by 253,000 to 5.1 million. The mismatch between demand and hiring suggests that labour market conditions could be tightening, something that could persuade the Federal Reserve to push ahead with its plans to hike interest rates at least twice more times in 2017.
Canadian Dollar
The Pound to Canadian Dollar exchange rate skidded to a half-cent daily decline yesterday despite the latest oil market wobble.
Sterling lost ground to most of the majors as political tensions weighed on the UK currency, however, the commodity-correlated ‘Loonie’ also suffered from the recent breakdown in relations between Qatar and a number of Gulf states. Some traders fear that Qatar could backtrack on the recent OPEC production cut extension in response to the decision of Saudi Arabia, Egypt, the United Arab Emirates, Bahrain, Yemen, Libya and the Maldives to cut diplomatic ties.
Although it is a member of OPEC, in the grand scheme of things, Qatar is not one of the most influential oil producing nations so the impact on global markets could prove to be limited.
Australian Dollar
The Pound to Australian Dollar exchange rate initially rallied by around 70 pips yesterday morning but ended the day down around half a cent.
Sterling peaked following the Reserve Bank of Australia’s decision to leave interest rates on hold at 1.50%. The RBA gave little indication that it would be tightening policy anytime soon and mentioned that GDP was likely to have slowed in recent months. However, GBP/AUD trended lower throughout the day as UK election jitters took over.
New Zealand Dollar
The Pound weakened by around 120 pips against the New Zealand Dollar yesterday as political tensions weighed on Sterling and rising dairy prices bolstered the appeal of the ‘Kiwi’. The latest dairy auction saw milk prices increase 0.6%, marking the sixth consecutive lift in global milk prices and boding well for the Antipodean nation’s dairy-driven export sector.