Pound Sterling (GBP) Exchange Rates Sturdy Ahead of Q3 UK GDP Report
Pound Sterling (GBP) exchange rates performed well yesterday and could push further ahead this week due to positive Brexit sentiment. British Prime Minister Theresa May said she was ‘ambitious and positive’ that the Brexit negotiations would go well, adding that the talks were being conducted in a ‘constructive spirit’. Indeed, recent comments from EU officials suggest that the talks could start to focus on Britain’s post-Brexit trade relationship with the EU in December and this could help assuage fears of a ‘no deal’ scenario.
If Wednesday’s third quarter UK GDP report prints positively then the Pound could easily drive higher across the board, as November Bank of England (BoE) rate hike expectations grow. However, a soft print – anything below the market consensus of 0.3% quarterly growth – would likely prompt a selloff in Sterling.
Pound to Euro Exchange Rate Ticks Higher Despite Claim Theresa May ‘Begged’ Jean-Claude Juncker For Help
The Pound to Euro exchange rate rallied by around half a cent yesterday as markets reacted positively to Theresa May’s upbeat Brexit comments, despite rumours that the British PM had ‘begged’ EU Commissioner Jean-Claude Juncker for help.
Citing an unnamed source, German newspaper FAZ reported that May ‘seemed anxious…despondent and discouraged’ during a dinner with Juncker last week. The article went on to paint a picture of May as ‘tormented…sleep-deprived, with deep rings beneath her eyes’. An ensuing Twitter row saw all parties involved with the dinner deny responsibility for the leak, and it seems that traders were happy to overlook the altercation and focus on the otherwise positive shift in Brexit sentiment.
Eurozone private sector output is tipped to come in at 56.5 for October today, down from 56.7 in September, but the figure is only likely to have a marked impact on GBP/EUR if it strays significantly from the median forecast.
Trump’s Fed Chair Nominee to Dictate GBP/USD Exchange Rate Sentiment
US President Donald Trump told reporters yesterday that he is ‘very, very close’ to announcing his nominee for Chair of the Federal Reserve. Although Trump mentioned that current Fed Chairwoman Janet Yellen remains in the running, he indicated that Stanford University economist John Taylor and Fed Governor Jerome Powell were the frontrunners.
Taylor is seen as the more hawkish candidate, meaning that expectations for tighter US monetary policy could bolster the appeal of the US Dollar if the Stanford economist were to be nominated by the President. Conversely, we could see the ‘Greenback’ fall back if Powell or Yellen were to get the nod.
Pound to Canadian Dollar Exchange Rate Could Strengthen on Dovish BoC
In recent weeks markets have pulled back on expectations for another 2017 rate rise in Canada due to dovish rhetoric from Bank of Canada officials. The Pound to Canadian Dollar exchange rate softened slightly yesterday and could continue trending lower over the next few days as traders await the BoC’s policy statement on Wednesday afternoon, which could easily feature further dovish remarks.
Pound to Australian Dollar Exchange Rate Strikes 10-Day High Ahead of Australian CPI
Sterling appreciated by around 40 pips yesterday to strike a 10-day high versus the Australian Dollar as upbeat Brexit sentiment and bullish technical patterns helped drive GBP/AUD higher. Later this week, however, Australian inflation data is tipped to come in at 2.0%, up from 1.9% previously, which could lend the ‘Aussie’ some support.
Pound to New Zealand Dollar Exchange Rate Steady Near 15-Month Highs
The Pound to New Zealand Dollar (GBP/NZD) exchange rate fluctuated with little clear directional bias yesterday as markets continued to digest the results of the New Zealand general election, which saw the Labour Party enter a coalition with New Zealand First and the Green Party. The surprise result initially sent the ‘Kiwi’ plummeting to 15-month lows due to uncertainty over how the new government will function, but the selloff lost momentum at the start of this week’s session.
Data Released Today
09:00 EUR Markit Eurozone Composite PMI (OCT P) Medium 56.5
14:45 USD Markit US Manufacturing PMI (OCT P) Medium 53.2