Pound Sterling Exchange Rates Gain on Surprisingly Strong UK Industrial Production Data
Better-than-anticipated British industrial production data helped prop-up Pound Sterling (GBP) exchange rates on Tuesday. Sentiment warmed following news that production accelerated from an upwardly revised 1.1% to 1.6% during August.
The National Institute of Economic and Social Research (NIESR) reported that UK GDP likely accelerated from 0.3% to 0.4% in the third quarter.
Sterling could continue to break higher from last week’s lows if UK Prime Minister Theresa May avoids fresh calls from within her own party to resign. A breakthrough in the Brexit talks would also come in handy – and with expectations so low, even a mild sign of progress in the trade negotiations could give the Pound a boost.
Record Trade Deficit Limits GBP/EUR Gains Despite Strong EU Export Figures
The Pound to Euro exchange rate drifted higher yesterday morning as traders reacted to data showing better-than-expected activity in the industrial sector. However, GBP/EUR failed to make any significant gains because investors were concerned with the state of the UK’s public finances.
Indeed, the trade deficit widened unexpectedly from -£12.8 billion to -£14.2 billion in August, it was reported yesterday. While exports to the EU grew by 4.1%, exports to the rest of the world suffered a -8.8% contraction and this contributed to the highest goods deficit on record.
There is little on the economic calendar related to the GBP/EUR exchange rate today, meaning that trading decisions could focus on any new announcements relating to the Brexit trade negotiations.
The EU wants to agree on the terms of the divorce – Britain’s exit payment, EU citizen’s rights and the Ireland / Northern Ireland border – before any future trading arrangements are made. Progress would likely benefit the Pound, while a negative statement would probably leave Sterling more sensitive to selling pressure than the single currency.
Will the Pound to US Dollar Exchange Rate Continue to Surge this Week?
A bullish breakout in the Pound to US Dollar exchange rate yesterday could signal that traders are willing to drive GBP/USD higher over the next few weeks.
GBP/USD rallied by around 70 pips, breaking through technical resistance, following stronger-than-expected UK industrial production data. As Bank of England rate hike bets mount in the buildup to the central bank’s policy meeting at the beginning of November, we could see Sterling register additional gains versus the US Dollar.
Alternatively, markets could easily decide against letting ‘Cable’ rise just yet, due to the profound levels of uncertainty in the political (rumoured leadership challenges to PM May) and trade (Brexit) spheres. Indeed, a hawkish statement from the Federal Reserve this evening would likely give the ‘Greenback’ the impetus to roar back into life versus the Pound.
Pound to Canadian Dollar Exchange Rate Rises, but Oil Prices Point to Future Strength in the ‘Loonie’
Sterling strengthened by around a quarter of a cent versus the Canadian Dollar yesterday but future rallies could be capped by an apparent rise in demand for oil.
Crude prices rose again yesterday on news of further Saudi Arabian export cuts in November, with the Gulf state planning to cut allocations by 560,000 barrels per day next month. If oil prices continue to rise then demand for the commodity-correlated ‘Loonie’ could pick up in the near-term.
Pound to Australian Dollar Exchange Rate Inches Higher amid Bearish Shift in ‘Aussie’ Sentiment
The Pound to Australian Dollar exchange rate ticked higher by a further 30 pips yesterday as bearish sentiment towards the Australian Dollar continued weigh on the Antipodean currency.
News that British GDP may have accelerated from 0.3% to 0.4% in the third quarter, combined with sturdy August UK industrial production data, helped drive demand for Sterling yesterday. The ‘Aussie’ Dollar meanwhile remains under pressure due to soft Reserve Bank of Australia rate prospects and falling iron ore prices.
Pound to New Zealand Dollar Exchange Rate Strikes Fresh High
Sterling struck a new high versus the New Zealand Dollar yesterday, and the pair looks set to trend higher so long as the Pound is not hit by any fresh anxieties related to Brexit or Theresa May’s fragile position as UK PM.
Data Released Today
19:00 USD FOMC Meeting Minutes (SEP 20) High