Today’s Pound Sterling Headlines
Sterling survives Autumn Budget – Analysts unmoved by OBR growth downgrades.
GBP/EUR exchange rate softens slightly – UK GDP and Eurozone PMIs on tap.
GBP/USD exchange rate hits five-week high – US traders away from desk for Thanksgiving.
GBP/AUD corrects higher – New Zealand retail sales beats estimates.
Pound Sterling Exchange Rate Flat as Autumn Budget Sees Growth Downgrades
With expectations low going into the Autumn Statement, Chancellor Philip Hammond managed to appease markets with what was generally considered a boring budget.
News that stamp duty was being axed for first-time buyers of houses under £300,000 took the headlines, but the Office for Budget Responsibility (OBR) said the measure would do little to help people get on the housing ladder, as it would likely lead to a 0.3% rise in house prices.
The OBR also revised down productivity growth from 7.5% to 5.7% over the next five years – its biggest ever downgrade – and slashed its domestic growth forecasts.
March’s 2017 GDP estimate was downgraded from 2.0% to 1.5%, while growth was tipped to shrink every year until it hits just 1.3% in 2019.
However, Sterling was not negatively impacted by the figures because analysts had already priced the prospect of weaker growth into the Pound’s exchange rate prior to the budget.
Pound to Euro (GBP/EUR) Exchange Rate Could Stabilise in Absence of Political Surprises
The Pound to Euro exchange rate softened minimally yesterday as downbeat economic forecasts were largely overlooked by investors who had already concluded that British growth would slow over the next few years.
Later this morning, Eurozone private sector data is tipped to come in at 55.9 for November, down from 56.0 in October, but is unlikely to have much of an impact on GBP/EUR trading patterns. Neither is the third quarter UK GDP revision, which is expected to confirm 0.4% growth between July and September.
This means Sterling is liable to trade fairly flatly versus the single currency throughout today’s session unless we are treated to any surprise political developments – and in this climate of minority government, Brexit and failed German coalition talks, surprises certainly can’t be ruled out.
Pound to US Dollar (GBP/USD) Exchange Rate Hits 3-Week High Ahead of Thanksgiving Holiday
GBP/USD hit a fresh three-week high yesterday following an unexpected decline in US durable goods. Orders of long-lasting, usually expensive, goods tumbled -1.2% in October, disappointing forecasts of a slender 0.3% expansion.
The data miss weighed on the appeal of the US Dollar because it was seen to suggest that consumers are holding off on big purchases, which could lead to softer economic activity.
The US Dollar softened further following the latest Federal Reserve minutes report, which revealed that some policymakers were concerned with the subdued inflationary outlook.
US traders will be focussing on turkey dinners rather than currency movements today, however, the absence of the North American market could cause added volatility. So, while it appears to be a quiet day for GBP/USD, there is always the chance of short-term, accentuated fluctuations.
Pound to Canadian Dollar (GBP/CAD) Exchange Flat Ahead of Canadian Retail Sales Report
Despite a bullish oil inventory report, which saw crude supplies shrink -1.9 million barrels, the commodity-correlated Canadian Dollar failed to post any gains versus the Pound (GBP/CAD) yesterday.
An expected 1.0% rise in Canadian retail sales could, however, give the Canadian Dollar a boost later this afternoon.
Pound to Australian Dollar (GBP/AUD) Exchange Rate Drifts Higher Following Dovish RBA Speech
The Pound to Australian Dollar exchange rate grew by around half a cent yesterday, in what appeared to be a correction following the decline in GBP/AUD on Tuesday.
The ‘Aussie’ had gained on comments from Reserve Bank of Australia Governor Philip Lowe, however, the speech featured little to suggest that interest rates will rise anytime soon and a dip in GBP/AUD always looked likely.
Pound to New Zealand Dollar (GBP/NZD) Exchange Rate Avoids Budget Losses
The Pound to New Zealand Dollar exchange rate held relatively firm yesterday, with markets largely insensitive to the UK Autumn Budget.
GBP/NZD did, however, soften slightly during the evening following the latest New Zealand retail sales report, which came in at 0.2%, beating estimates of 0.1%.
Data Affecting Today’s Pound Sterling Forecast
GBP/EUR Markit Eurozone Composite PMI (NOV P)
GBP Gross Domestic Product (QoQ) (3Q P)
GBP Gross Domestic Product (YoY) (3Q P)
GBP/CAD Retail Sales (MoM) (SEP)