Bearish Pound Sterling Sentiment Could Lead to Further Losses for GBP Exchange Rates
Pound Sterling (GBP) exchange rates could easily find themselves sliding at the start of this week’s session with little fresh economic data to lend the British currency support.
Although markets were cheered late last week by UK Prime Minister Theresa May’s pledge to stay in power and offer the country ‘calm leadership’, there is every chance that the PM could suffer from a leadership challenge. Indeed, Conservative party chairman Grant Shapps said on Friday that he had garnered the support of 30 lawmakers who wanted to remove May from her post.
Also weighing on the Pound of late is the fear that lack of progress in the Brexit negotiations could cause Britain to fall out of the EU in March 2019 without a new trading deal with its largest trading partner.
Pound to Euro Exchange Rate Slides to 3-Week Low Over the Weekend on Political Uncertainty
The Pound to Euro exchange rate plunged to new three-week lows on Friday and Sterling could struggle to rebound versus the single currency during this week’s session.
Important Brexit talks are due to resume today and, unless negotiators reach an unlikely accord, GBP/EUR could languish around multi-week lows, with Brexit headlines likely to lead to volatility in the pair.
To a lesser extent, the Euro could also suffer from political uncertainty as the Catalonian government fights for independence.
Although Spanish authorities have called the Catalonian vote illegal, Catalonian leader Carles Puigdemont intends to declare independence later in the week. The region accounts for around 20% of Spanish GDP and over 25% of exports, meaning that secession could seriously weaken the Eurozone’s fourth largest economy.
Pound to US Dollar Exchange Rate Hits 1-Month Low as Investors Overlook Weak US NFP Report
The Pound to US Dollar exchange rate struck a one-month low on Friday and could continue to flounder at the start of this week’s session.
Investors were happy to overlook the first decline in US non-farm payrolls for seven years, given that September’s score was severely impacted by tropical storms in Texas and Florida. The NFP figure came in at -33,000, undershooting expectations of +80,000 and much worse than August’s upwardly revised score of +169,000.
The US Dollar, however, avoided sustaining losses due to the belief that the Federal Reserve will look through the anomalous September data and press ahead with plans to tighten monetary policy later in the year.
The ‘Greenback’ was also cheered by a surprise jump in average hourly earnings, from 2.7% to 2.9%, which was seen to bode well for hawkish Fed bets and could apply negative pressure on GBP/USD this week.
Pound to Canadian Dollar Exchange Rate Could Recover on Falling Oil Prices
Sterling’s broad weakness extended to the Pound to Canadian Dollar exchange rate on Friday, with GBP/CAD sliding to a new three-week low.
Sturdy domestic data bolstered the appeal of the ‘Loonie’, with unemployment holding steady at 6.2%. However, we could potentially see GBP/CAD press ahead this week if falling oil prices translate into softer demand for the commodity-correlated ‘Loonie’.
Pound to Australian Dollar Exchange Rate Inches Higher on Dovish RBA Comments
Comments from Reserve Bank of Australia (RBA) policymaker Ian Harper dragged the ‘Aussie’ Dollar lower on Friday and dovish sentiment could continue to impact GBP/AUD through the next week of trading.
RBA board member Harper described Australia’s economic recovery as ‘painfully slow’, flagging that soft wage growth could prevent the RBA from hiking interest rates in the near-term.
Pound to New Zealand Dollar Exchange Rate Susceptible to Negative Risk Appetite
Rising Federal Reserve rate hike bets weighed on global risk appetite at the end of last week’s session and the risk-sensitive New Zealand Dollar could come under pressure again over the next few days as investors ramp up their US rate rise expectations.
Data Released Today
No important ecostats due for release today.