Today’s Pound Sterling Headlines
Pound Sterling softens ahead of Brexit deadline – Jittery investors lock-in profit.
UK manufacturing hits four-year high – GBP fails to gain.
GBP/USD exchange rate dips from two-month high – Political turbulence weighs.
GBP/CAD exchange rate down almost -300 pips – Canadian unemployment plunges to 9-year low.
Pound Sterling Exchange Rates Soften Ahead of Brexit Deadline
The British Pound softened versus most of the majors on Friday as investor nerves kicked in ahead of today’s Brexit deadline.
If EU officials are happy with Britain’s progress on three key issues – the rights of EU citizens, the Irish border and Britain’s divorce payment – then demand for Sterling is likely to tick higher over the coming weeks as Brexit negotiations move onto future trade relations.
However, if the EU declares that sufficient progress has not been made – and at this stage the Irish border looks like the thorniest issue – then we could see a significant correction lower in Pound Sterling exchange rates.
Pound to Euro (GBP/EUR) Exchange Rate Cools Despite Four-Year High Manufacturing PMI
The Pound to Euro (GBP/EUR) exchange rate softened slightly on Friday, despite sturdy UK manufacturing data, as jittery investors sold Sterling ahead of today’s Brexit deadline crunch talks.
The headline factory output PMI rose from 56.6 in October to a four-year high of 58.2 in November, thanks to growth in output, new orders and employment.
The forward-looking elements of the survey also performed well, suggesting the sector could contribute to economic growth in 2018.
However, demand for the Pound remained capped by concerns that a negative outcome from today’s Brexit talks could lead to steep Sterling losses.
Pound to US Dollar (GBP/USD) Exchange Rate Dips from Two-Month High as Political Turbulence Hits Dollar
The Pound to US Dollar (GBP/USD) exchange rate weakened on Friday as traders locked-in profit from the recent two-month high ahead of today’s crucial Brexit talks.
However, demand for the US Dollar was also soft on Friday due to political strife in the Washington.
Former US national security adviser Michael Flynn pleaded guilty to lying to the FBI over the contact he had with Russia during Donald Trump’s Presidential campaign last year.
The revelation hit the ‘Greenback’ as it could have implications for the President if it emerges that he was aware of the contact with Moscow. If the scandal escalates then we could see the US Dollar trade with a negative bias over the coming weeks.
Pound to Australian Dollar (GBP/AUD) Exchange Rate Forecast to Hit New 17-Month High on Positive EU Outcome
A mixture of profit-taking and investor jitters took the Pound to Australian Dollar (GBP/AUD) exchange rate lower by around -180 pips on Friday.
GBP/AUD struck its highest level since the Brexit vote on Thursday, which appeared to prompt a bout of profit-taking as markets fretted over the possibility that Britain might not get the green light from EU officials to begin discussing future trade this week.
Under this scenario the Pound would be liable to sustain significant losses versus the ‘Aussie’ over the next few days.
Alternatively, a positive outcome could see the Pound Australian Dollar rate touch new 17-month highs.
British Pound to New Zealand Dollar Exchange Rate Depreciated -200 Pips
The Pound to New Zealand Dollar (GBP/NZD) exchange rate plunged over -200 pips on Friday as traders hedged against the possibility of a setback at today’s crucial Brexit talks.
Trading through today’s session will likely be dictated by the outcome of the EU discussions, meaning the November UK construction report is liable to have only a limited impact.
Data Affecting Today’s Pound Sterling Forecast
09:30 GBP Markit/CIPS UK Construction PMI (NOV)
15:00 USD Factory Orders (OCT)