Pound Sterling Slides to 5-Month Low vs Basket of Most-Traded Currencies
It was a quiet day in terms of high stature data releases yesterday, however, there were some big moves on the currency market. With Brexit anxieties and the Bank of England’s dovish outlook weighing on the Pound, Sterling fell to a five-month low against a basket of its most-traded currencies.
Data from Visa showed that UK consumer spending fell for the third month on the trot in July, contracting -0.8% as Britons felt the effects of hot inflation and cold wage growth. Clothes, cars and foreign travel were the main areas of weakness, while restaurants and hotels fared better, suggesting that the post-Brexit depreciation of the Pound has made Brits more likely to holiday at home than abroad.
Pound to Euro Exchange Rate Touches 10-Month Low
The Pound to Euro exchange rate declined by around a third of a cent yesterday to strike its lowest level for 10-months.
Data in Germany showed that industrial output shrunk -1.1% in June but the data had little impact on demand for GBP/EUR as the longer-term trend still points to positive growth in the currency bloc’s largest economy.
The Eurozone recorded a 0.6% GDP expansion in the second quarter, double the 0.3% recorded in Britain. And with economic prospects finally looking up in the continent, traders are continuing to bet on near-term monetary tightening from the European Central Bank. In light of the Bank of England’s recent decision to leave rates on hold and downgrade UK GDP forecasts, the Pound is struggling to keep up with the single currency.
Pound to US Dollar Exchange Rate Softens Again
‘Cable’ reduced in value by around a quarter of a cent yesterday. However, Sterling managed to avoid sliding through longstanding psychological support, suggesting that it may take a fresh negative development to send GBP/USD lower.
There is little on the economic docket for the pair this week, but we could see some volatility around Thursday’s UK industrial production report. The data print is anticipated to show a contraction of -0.1% in June, which could send Sterling lower, while a positive surprise could give the Pound a little bit of a boost.
Pound to Canadian Dollar Exchange Rate Bounces 30 Pips
The Pound to Canadian Dollar exchange rate managed to salvage a daily gain of around 30 pips yesterday, having previously shed around two cents following the BoE’s dovish policy statement last Thursday. The commodity-correlated ‘Loonie’ appeared to suffer from a slide in oil prices, which came as a result of nerves related to this week’s OPEC compliance meeting.
Pound to Australian Dollar Exchange Rate Up Minimally
Sterling rallied mildly against the Australian Dollar yesterday, however, the small gains for the Pound did not amount to a significant shift in sentiment and GBP/AUD could suffer additional near-term losses if global market sentiment improves or Brexit jitters intensify.
Pound to New Zealand Dollar Exchange Rate Appreciates 100 Pips
The latest Reserve Bank of New Zealand two-year inflation expectations survey showed a slight downtick in CPI bets, with the figure falling from 2.17% to 2.09%. The dovish number appeared to weigh on the New Zealand Dollar, helping the Pound register a one-cent gain against the ‘Kiwi’.
Data Released Today
No important ecostats due for release.