Pound Sterling Could Weaken on Soft UK Data Prints
The Pound failed to register any meaningful gains or sustain any marked losses yesterday, as there were no fresh domestic data prints for investors to deal with. However, we could see slightly more concerted market moves during today’s session.
The June industrial production report is tipped to see a contraction of -0.1%, which could weigh on demand for Sterling, while the UK trade balance is anticipated to remain high, around the -£11 billion mark.
The Pound could also feel the sting of soft domestic growth if the National Institute of Economic and Social Research’s July GDP estimate matches forecasts of 0.3%.
Pound to Euro Exchange Rate Remains Soft
The Pound to Euro exchange rate drifted higher by around 20 pips yesterday as Sterling continued to bounce from the 10-month low struck on Tuesday.
Despite the relative calm of the last four days, GBP/EUR is now around four cents lower than it was just three weeks ago, and is within a cent of its lowest level for seven years.
Diverging policy expectations between the Bank of England and the European Central Bank are the main reason for the Pound’s depreciation against the single currency, while Brexit anxieties remain a key concern in all Sterling pairs.
Pound to US Dollar Exchange Rate Flat Despite North Korea Tensions
The Pound to US Dollar exchange rate rose through resistance yesterday, with the safe haven ‘Greenback’ failing to benefit from defensive inflows.
Markets all over the world focussed on tensions between the US and North Korea, which escalated when US President Donald Trump threatened the rogue state with ‘fire and fury like the world has never seen’.
North Korea responded by claiming it was considering plans for a missile strike on the US Pacific territory of Guam, to which Trump boasted that America’s nuclear arsenal ‘is now far stronger and more powerful than ever before’.
The US Dollar, the world’s premier reserve currency, often appreciates during times of risk aversion, as traders flock to assets offering stability rather than profit yield. However, on this occasion GBP/USD managed to reassert itself above psychological resistance.
Pound to Canadian Dollar Exchange Rate Rises on Risk Aversion
Risk aversion allowed the Pound to rally by around half a cent versus the Canadian Dollar yesterday as investors reacted to heightened tensions between the US and North Korea.
Although the Swiss Franc was the major winner from the worrying situation, Sterling’s position as a safe haven currency allowed it to gain ground versus the commodity bloc.
Pound to Australian Dollar Exchange Rate Appreciates as Risk Sentiment Tumbles
Sterling gained by around 80 pips against the Australian Dollar yesterday as demand for the risk-sensitive ‘Aussie’ softened on fears of military action between the US and North Korea.
Pound to New Zealand Dollar Exchange Rate Softens Following RBNZ Policy Decision
The Pound to New Zealand Dollar exchange rate tumbled half a cent following the Reserve Bank of New Zealand’s decision to leave rates on hold at 1.75% last night.
The decision was expected beforehand, but investors were moved to buy the ‘Kiwi’ following remarks suggesting that inflation remains in the bank’s target range and that economic growth is set to improve going forwards.
Data Released Today
09:30 GBP Industrial Production (YoY) (JUN)
09:30 GBP Manufacturing Production (YoY) (JUN)
09:30 GBP Visible Trade Balance (Pounds) (JUN)
13:00 GBP NIESR Gross Domestic Product Estimate (JUL)