Pound Sterling Remains Soft Following Dovish BoE
The Pound remained at depressed levels versus the majors on Friday as traders continued to digest the dovish message from Thursday’s Bank of England policy report. The BoE voted 6-2 to leave rates on hold on Thursday and downgraded its UK GDP forecasts for the next two years.
BoE Deputy Governor Ben Broadbent, who voted against raising rates in August, commented on Friday that the UK economy is better placed for interest rates to rise a ‘little bit’.
The BoE official predicted further growth in wages and the wider economy in the medium term, however, his marginally hawkish remarks had little impact on Sterling so soon after the monetary policy committee’s decision to vote against raising rates.
Pound to Euro Exchange Rate Touches New 9-Month Low
The Pound to Euro exchange rate struck a fresh nine-month low on Friday as reduced bets of an interest rate hike from the Bank of England weighed on demand for Sterling.
Although Deputy Governor Ben Broadbent commented on Friday that interest rates might rise a little bit over time, the BoE also mentioned that inflation is expected to slow in 2018.
Indeed, as the year-on-year impact of Sterling’s post-Brexit depreciation fades from the consumer price index, inflation is liable to soften, which in turn could remove some pressure on the UK central bank to tighten policy. This inflation development could cause the Pound to weaken even further against the Euro over the next few months.
Pound to US Dollar Exchange Rate Slides -100 Pips as US NFP Report Impresses
The Pound tanked by a whole cent against the US Dollar on Friday afternoon following a better-than-anticipated US non-farm payroll report.
The July payroll figures pointed to above-trend jobs growth of 209,000, which was above the median consensus of 180,000. The robust job creation figures drove the US unemployment rate down one notch to a new 16-year low of 4.3%, while investors were also cheered by a slight uptick in wage growth to 2.5%.
The sturdy report bolstered the appeal of the US Dollar as it was seen to increase the chances of the Federal Reserve pulling through with its plans to increase interest rates one more time in 2017.
Pound to Canadian Dollar Exchange Rate Sinks as Canadian Unemployment Hits 9-Year Low
The Pound to Canadian Dollar exchange rate tumbled by around -80 pips on Friday afternoon as Canadian unemployment slid from 6.5% to a nine-year low of 6.3%. The surprisingly strong labour market report bolstered Bank of Canada rate hike expectations and sent the ‘Loonie’ higher versus Sterling. The biggest jobs gains came in retail, IT and manufacturing industries.
Pound to Australian Dollar Exchange Rate Unable to Take Advantage of Robust US NFP
Sterling caught a bid following the sturdy US NFP report on Friday afternoon, however, bearish market sentiment towards the UK currency meant that the Pound quickly gave up its gains and stuttered to a daily defeat against the Australian Dollar. The strong US labour figures were seen to weigh on global risk sentiment, as they appeared to increase the probability of a Fed rate hike – usually this would put pressure on the ‘Aussie’ but on this occasion the Pound was in no position to take advantage.
Pound to New Zealand Dollar Exchange Rate Down -70 Pips
The Pound to New Zealand Dollar exchange rate ticked lower by around -70 pips on Friday as negative Sterling sentiment weighed. Technical data suggests that GBP/NZD is trading with a bearish bias, suggesting a 66% chance that the pair will weaken during today’s session.
Data Released
USD Consumer Credit (JUN)