GBP Exchange Rates Rally on Better-than-Expected Retail Sales
Pound Sterling (GBP) exchange rates rallied modestly on the back of October’s UK retail sales data, which showed a contraction on the year of -0.3% rather than the -0.4% drop forecast.
While consumers continued to show signs of reining in their spending in response to the ongoing wage squeeze, this slight upside surprise was still enough to boost GBP exchange rates.
Even so, this is unlikely to encourage the Bank of England (BoE) to take a more hawkish view on monetary policy in the coming months as worries over the domestic outlook persist.
Pound Sterling Today
Pound exchange rates avoid big losses due to the UK wages print coming in slightly higher-than-expected.
The Pound to Euro (GBP/EUR) exchange rate could rally on soft Eurozone inflation – CPI has been tipped to dip to 1.4%.
The Pound to US Dollar (GBP/USD) exchange rate rallies slightly, but a slide is forecast for the currency pair on political concerns.
The Pound to Canadian Dollar (GBP/CAD) exchange rate also rose on NAFTA fears.
GBP Exchange Rates Avoid Big Losses as UK Wages Beat Forecasts
A mixed bag of UK labour data failed to lift demand for Pound Sterling (GBP) Exchange Rates yesterday.
While the headline unemployment rate remained at a 42-year low of 4.3%, the number of people in work fell by the most in two years (-14,000) in the three months to September.
Economists were also concerned by the inactivity rate, which measures the number of people not in work and not seeking a job, because it rose by the most in eight years to 21.6%
But the Pound was able to avoid any steep losses because the average earnings print came in at 2.2%, slightly better than prior forecasts of 2.1%.
The wage data was seen as the most important element of the labour report but, with earnings still lagging way below the 3.0% rate of inflation, it will take a much more positive figure to persuade the Bank of England to raise rates again over the next 12 months.
Pound to Euro (GBP/EUR) Exchange Rate Could Gain on Soft Eurozone CPI Inflation
The Pound to Euro exchange rate recovered from initial losses yesterday and could go on to post gains during today’s session if Eurozone inflation remains soft.
Analysts are primed for the European consumer price index for October to print at 1.4%, down from 1.5% in September and markedly lower than the European Central Bank’s 2.0% target.
If the result prints inline with expectations then it could spell trouble for the single currency because ECB policymakers will be wary of tightening policy in the future if price pressures remain doggedly below target.
Pound to US Dollar (GBP/USD) Exchange Rate at Risk of Depreciation
‘Cable’ ticked higher, but only slightly, yesterday as US inflation slipped from 2.0% to 1.8%. The result is unlikely to deter the Federal Reserve from raising interest rates in December but it could impact the US central bank’s plans for future policy.
A separate report showed a surprise 0.2% rise in retail sales, which went some way to offsetting the downbeat CPI print.
While both the Pound (Brexit and a weak government) and the US Dollar (receding tax reform expectations) are feeling the pressure of political influences, it is Sterling that appears most at risk of moving lower in the coming days.
Pound to Canadian Dollar Exchange Rises on NAFTA Fears
The Pound put in a decent performance against the Canadian Dollar yesterday, gaining around 80 pips as falling oil prices weighed on the commodity-correlated ‘Loonie’.
The Canadian Dollar also suffered due to anxieties surrounding the North American Free Trade Agreement (NAFTA).
Some analysts fear that US President Donald Trump’s hardline, America-first position could lead to a breakdown of NAFTA that would seriously impact the profitability of Canada’s export sector.
Pound to Australian Dollar Exchange Rate Strikes 5-Month High
The Pound to Australian Dollar exchange rate jumped 120 pips to hit a five-month high yesterday as disappointing Australian wage data weighed heavily over the ‘Aussie’.
The Australian Dollar reacted negatively to data showing that wages increased 0.5% in the third quarter, undershooting expectations of 0.7%.
It will be interesting to see whether Sterling manages to hold onto these gains, as the five-month high could represent an appealing rate for traders looking to lock-in profit.
Technical Analysis Suggests Pound to New Zealand Dollar (GBP/NZD) Exchange Rate Gains Possible
The Pound to New Zealand Dollar exchange rate ticked higher yesterday and technical analysts believe GBP/NZD could push ahead over the coming weeks due to bearish trading formations on the charts.
Data Affecting Today’s GBP Exchange Rate Forecast
09:30 GBP Retail Sales Ex Auto Fuel (YoY) (OCT)
10:00 EUR Euro-Zone Consumer Price Index (YoY) (OCT F)
14:15 USD Industrial Production (MoM) (OCT)