Today’s Pound Sterling Headlines
Brexit headlines in focus – Irish border issue could prevent progress.
GBP/EUR exchange rate drifts higher – Eyes on Ireland.
GBP/USD exchange rate strikes eight-week high – But profit-taking kicks in.
GBP/CAD exchange rate hits November high – BoC statement on tap.
Brexit Headlines to Influence Pound Sterling Exchange Rates as Irish Border Issues Come into Focus
With little on the economic calendar this week, demand for the British Pound will likely be dictated by headlines related to Brexit.
The EU has told UK Prime Minister Theresa May that her Brexit divorce offer (including exit payment, Irish border and rights of EU citizens) must be completed by December 4.
Speculation that the PM had acquired authorisation from the Tory party to double her divorce settlement payment from £20 billion to £40 billion had supported Sterling, but political events in Ireland have thrown another spanner in the works.
Irish opposition party Fianna Fail is preparing to launch a motion of no-confidence, which would likely prompt fresh elections and could disrupt the British-Irish border negotiations.
Irish PM Leo Varadkar has stated that he would veto allowing Britain to begin discussing future trade in December if the border issue is not resolved.
This leaves Sterling susceptible to selling pressure if new elections in Ireland get in the way of the UK and Ireland clinching a deal.
Pound to Euro (GBP/EUR) Exchange Rate Drifts Higher but Brexit Threats Remain
It was a fairly quiet day for the GBP/EUR exchange rate at the start of the week, with the Pound drifting higher by around 20 pips versus the Euro.
Brexit remains the key concern for holders of Sterling and we could see the UK currency struggle against the Euro over the next few days. Especially if tensions in Ireland, and between Ireland and the UK, continue to pose a threat to Britain’s hopes of beginning future trade talks with the EU in December.
Alternatively, if the negotiations go swimmingly, it could set-off a spike in demand for the Pound.
Pound to US Dollar (GBP/USD) Exchange Rate Hits New 8-Week High
The Pound to US Dollar (GBP/USD) exchange rate stuck a fresh eight-week high yesterday, but profit-taking dragged ‘Cable’ back down by the end of the day.
Having seen 2018 Federal Reserve rate hike bets drop following last week’s minutes report from the central bank, it seems traders are steering clear of the US Dollar.
The Fed noted that inflation could remain softer than previously expected in the New Year, which would likely signal a period of steady interest rates.
A lack of support for US President Donald Trump’s inflationary spending and tax policies is a key factor in the recent downturn in fortunes for the US Dollar.
Pound to Canadian Dollar (GBP/CAD) Exchange Hits November High as Oil Prices Soften
Sterling appreciated by around 70 pips versus the Canadian Dollar (GBP/CAD) yesterday to strike its highest level since the beginning of November.
The main catalyst for the GBP/CAD rally seemed to be a drop in demand for the nation’s most-lucrative export. Oil slid around -1% having recently touched a two-year high.
During today’s session demand for GBP/CAD will likely be dictated by the rhetoric employed in a speech from Bank of Canada Governor Stephen Poloz.
Hints at rate hikes in 2018 could boost the ‘Loonie’, while cautionary remarks could weigh.
Pound to Australian Dollar (GBP/AUD) Exchange Rate Could Rally on Brexit Progress
The Pound to Australian Dollar (GBP/AUD) exchange rate fluctuated with no real directional bias yesterday.
Sterling remains close to six-month highs versus the ‘Aussie’, however, the UK currency appears sensitive to Brexit headlines at this juncture and we could see GBP/AUD pullback if the issue around the Irish border is not resolved over the next week.
Pound to New Zealand Dollar (GBP/NZD) Exchange Rate Slides -150 Pips
Without any clear stimulus, the Pound ceded almost -150 pips to the New Zealand Dollar (GBP/NZD) during yesterday’s session.
Going forward it seems Sterling could struggle if Brexit talks hit a roadblock, while the Pound could jump on signs of progress in the negotiations.
Data Affecting Today’s GBP Exchange Rate Forecast
15:00 USD Consumer Confidence Index (NOV)
16:30 CAD Bank of Canada Gov. Poloz, Sr. Dep. Gov Wilkins Press Conference