Pound Sterling to Euro, US Dollar Exchange Rates Down as UK Car Sales Plummet
Pound Sterling to Euro (GBP/EUR) and US Dollar (GBP/USD) exchange rates slumped yesterday as a combination of political anxieties and a poor UK car sales report weighed on demand.
New car registrations contracted -9.3% in September, it was reported yesterday, marking the sixth consecutive month of decline in the sector. Cars are seen as a good barometer of UK consumer sentiment and the poor result was especially damning seeing as many buyers choose to purchase in September to take advantage of the new licence plates.
Pound Sterling (GBP) exchange rates also found themselves under pressure from political jitters, with some analysts speculating that UK Prime Minister Theresa May could face a leadership challenge in the near future.
Any rebellion from within her own party could easily lead to another general election, and that would add another layer of uncertainty for investors to take into account when pricing the Pound.
Pound to Euro Exchange Rate Drops on Political Concerns
The Pound to Euro exchange rate dipped half a cent yesterday morning as markets fretted over the potential for another political crisis in the UK.
Following a disastrous keynote speech from UK PM Theresa May at the Conservative party conference, which saw the Prime Minister lose her cool after being handed a P45 purportedly ‘from Boris’ by a prankster comedian, speculation intensified over the possibility of a leadership challenge.
With Brexit negotiations already behind schedule, the idea of a new PM, and potentially new elections, undermined confidence in the Pound as traders considered the increased chances of Britain dropping out of the European Union without a new trade deal.
The latest European Central Bank minutes revealed a slightly dovish outlook, with policymakers keen to continue purchasing assets next year, albeit at a slower pace than the current programme. The statement had little impact on GBP/EUR.
Pound to US Dollar Exchange Rate Slides to 3-Week Low Ahead of US NFP Report
The Pound to US Dollar exchange rate slid -100 pips to strike a fresh three-week low yesterday as robust US data bolstered the appeal of the ‘Greenback’.
Following decade-high private sector ISM scores, the US economy was treated to a two-year high figure for exports, which helped bring down the deficit from -$43.6 billion to -$42.4 billion. Additionally, durable goods orders jumped 2.0%, beating expectations of 1.7%, and factory goods orders rebounded from a -3.3% contraction to grow 1.2% in August.
The positive results so far this week have gone some of the way to insulating the US Dollar from a potentially soft jobs report. This afternoon’s September non-farm payroll figure is tipped to come in at 80,000 – around half the 156,000 recorded in August.
The reduced expectations are due to the damage caused by Hurricanes Harvey and Irma, but investors are optimistic that the Federal Reserve will not delay plans to raise rates in December even if today’s report disappoints.
Pound to Canadian Dollar Exchange Rate Down Ahead of Canadian Unemployment Report
Sterling depreciated by around a quarter of a cent versus the Canadian Dollar yesterday. GBP/CAD’s losses could have been greater had it not been for some soft Canadian trade data.
Canadian exports dipped for the third month in a row during August, it was reported yesterday. The figure sent the Canadian deficit up from –CS$3.0 billion to –CS$3.4 billion and caused some investors to reduce their bets of another rate hike from the Bank of Canada in 2017.
Later today the ‘Loonie’ could perform well if the domestic unemployment report shows a dip in joblessness, however, analysts are primed for the score to remain at 6.2%.
Pound to Australian Dollar Exchange Rate Flat as Retail Sales Slump Down Under
The steepest drop in Australian retail sales since the start of 2013 spared Sterling’s blushes versus the Australian Dollar yesterday.
While the Pound weakened versus the majors, GBP/AUD closed flat for the day as investors responded negatively to the -0.6% drop in August retail sales volumes.
The downbeat score was seen to corroborate concerns, voiced earlier in the year by the International Monetary Fund and the Reserve Bank of Australia, over the outlook for Australian household spending.
Pound to New Zealand Dollar Exchange Rate Sinks Half a Cent
Bearish market sentiment towards the Pound allowed the New Zealand Dollar to rally by around half a cent against Sterling yesterday.
Although UK PM Theresa May’s fragile position threatens to impact trade negotiations between Britain and the EU, there is potential for a turnaround in fortunes for the Pound when the Bank of England meets to discuss monetary policy early next month.
The BoE is seen as 70% likely to raise rates in November, and we could see demand for Sterling pickup if the UK central bank follows through on recent hawkish rhetoric.
Data Released Today
13:30 USD Change in Non-farm Payrolls (SEP)
13:30 USD Unemployment Rate (SEP)
13:30 USD Average Hourly Earnings (YoY) (SEP)
13:30 CAD Unemployment Rate (SEP)
13:30 CAD Net Change in Employment (SEP)