Pound Exchange Rates Mixed as Data Shows Continued Real Pay Decline
The Pound was on mixed form yesterday; weak risk-appetite helped Sterling to stay afloat versus the ‘Aussie’ and ‘Kiwi’, but wage growth data kept GBP on the decline elsewhere.
Although unemployment figures were encouraging and wage growth did accelerate, real pay still fell -0.4% excluding bonuses. This marked the sixth consecutive month of declines for real wages, which does not bode well for the UK’s consumer spending-driven economy.
UK retail sales figures are set for release this morning; signs of slowing growth or a contraction would likely push the Pound lower as the economic outlook worsens.
Expectations of Swift Greek Bailout Review Boost Euro
The Pound to Euro exchange rate fell yesterday as the common currency strengthened against its major peers. Greece’s creditors were due to head back to the nation to assess the extent with which the Hellenic government has complied with the reforms mandated under the bailout conditions.
Expectations that these reviews would be conducted swiftly, clearing the way for talks on debt relief and Greece’s exit from the rescue programme next year, put investors in a good mood.
GBP/USD Weakened by Strong Fed Hike Bets despite Housing Disappointment
GBP/USD edged lower as the US Dollar managed to swerve the negative impact of below-forecast construction data. The number of new housing starts fell -4.7% in September; over double the forecast decline.
This was accompanied by a -4.5% drop in the number of building permits issued. But Federal Reserve President William Dudley was sounding upbeat on the US economy in his latest speech, suggesting he will back a rate hike in December.
US jobless claims, a speech from Federal Reserve official Esther George and the latest leading indicators release could wobble the GBP/USD exchange rate today.
Canadian Manufacturing Shipment Rebound Undermines GBP/CAD
Strong Canadian manufacturing data weakened the GBP/CAD exchange rate, even though the markets were largely risk-averse yesterday. After a -2.6% decline in July, shipments grew 1.6% in August, against forecasts of a -0.3% drop. This supported the Canadian Dollar higher.
GBP/AUD Makes Strong Advance as Risk Appetite Cools
A lack of data on the economic calendar and strong bets of US monetary tightening again this year weighed on the Australian Dollar, allowing the weak Pound to hold on to opening levels.
As well as Australian labour market data for September, third-quarter Chinese GDP figures – both released earlier this morning – could cause significant volatility for the GBP/AUD exchange rate.
Recent Drop in Dairy Prices Enables GBP/NZD Gains
Like the Australian Dollar, the New Zealand Dollar was on poor form thanks to a lack of domestic data and Fed hike expectations.
The ‘Kiwi’ was also still reacting poorly to the recent drop in milk prices and the continued political uncertainty after the General Election. GBP/NZD has since been able to skyrocket after New Zealand First announced it would back Labour in a coalition, ousting the incumbent National Party after nine years.
New Zealand’s net migration figures for September aren’t due out until late this evening. That will leave the ‘Kiwi’ at the mercy of market reaction to today’s Chinese growth data.
Data Released Today
09:30 GBP Retail Sales (MoM) (SEP)
09:30 GBP Retail Sales (YoY) (SEP)
13:30 USD Initial Jobless Claims (OCT 14)
13:30 USD Philadelphia Fed Business Outlook (OCT)
13:30 USD Continuing Claims (OCT 07)
14:30 USD Fed’s George Speaks in Oklahoma
15:00 USD Leading Indicators (SEP)
22:45 NZD Net Migration SA (SEP)