Pound Sterling Suffers Ahead of Q2 UK GDP Report
The Pound received another pummeling on the currency markets yesterday as traders fled Sterling due to anxieties over Britain’s ability to make a success of Brexit.
Little concrete progress has been made in the Brexit negotiations this month, which, combined with receding Bank of England (BoE) rate hike bets, has left Sterling susceptible to selling pressure versus the majors.
This morning’s second quarter UK GDP report, which is tipped to show quarterly growth of 0.3% and annualised growth of 1.7%, could give the Pound a much-needed leg-up if it surprises to the upside. However, an underperforming print could add to Sterling’s woes.
Pound to Euro Exchange Rate Sinks to 8-Year Low as Eurozone Manufacturing Impresses
The Pound to Euro exchange rate slid to an eight-year low yesterday as Brexit worries persisted to limit demand for Sterling, while an upbeat manufacturing report bolstered the appeal of the single currency.
Barring a few minutes of madness in October, when a flash crash took GBP/EUR down by over five cents and then back up again, Sterling has not been this low against the single currency since late 2009.
European Central Bank (ECB) President Mario Draghi gave a speech yesterday morning but it featured no new policy clues and had little impact on the Euro. However, the single currency did pickup following the latest Eurozone factory output PMI, which came in at a six-year high of 57.4.
Pound to US Dollar Exchange Slips to 2-Month Low Despite Trump Concerns
‘Cable’ drifted lower by around a quarter of a cent yesterday to strike a two-month low despite comments from US President Donald Trump weighing on demand for the US Dollar.
Trump’s decision to threaten to shutdown the US government if officials do not give him funding to build a wall on the US-Mexico border concerned traders, as did remarks suggesting he still plans to scrap the North American Free Trade Agreement (NAFTA).
The ‘Greenback’ could receive a boost on Friday if Federal Reserve Chairwoman Janet Yellen proposes additional monetary tightening, however, a cautious surprise could give GBP/USD the impetus to rebound.
Pound to Canadian Dollar Exchange Strikes New 7-Month Low
The Pound to Canadian Dollar exchange rate shed a further half-cent yesterday to strike a fresh seven-month low as soft British sentiment weighed heavily on demand for Sterling.
The ‘Loonie’ softened against some of the other major currencies yesterday, due to Trump’s suggestion that NAFTA would probably be scrapped, but the embattled Pound was unable to take advantage of this.
Pound to Australian Dollar Exchange Rate Remains Close to 5-Month Low
Sterling traded close to a five-month low against the Australian Dollar throughout yesterday’s session as traders worldwide continued to punish the Pound for the perceived lack of potential for a BoE interest rate anytime soon.
The potential for years of long-winded Brexit talks ahead ensure that analysts cannot accurately gauge the trajectory of the British economy.
Pound to New Zealand Dollar Exchange Rate Rises 100 Pips
The Pound to New Zealand Dollar exchange rate bucked the trend yesterday, rising by around a cent as Sterling posted losses versus almost every other major currency. The risk-sensitive ‘Kiwi’ appeared to lose support following Trump’s fiery speech, which was not seen to bode well for global trade.
Data Released Today
09:30 GBP Gross Domestic Product (QoQ) (2Q P) Medium 0.3%
09:30 GBP Gross Domestic Product (YoY) (2Q P) High 1.7%