Pound Sterling Exchange Rates Fluctuate on Brexit Developments
After initially rallying on Friday in response to the news that the UK had struck an exit deal with the EU, Pound Sterling exchange rates broadly weakened on rumors trade talks could be delayed until February.
The British Pound remains down from last week’s best levels, despite Prime Minister Theresa May claiming that there is a new ‘sense of optimism’ in Brexit talks.
May is expected to tell MPs today; ‘I know some doubted we would reach this stage. I have always been clear that this was never going to be an easy process. It has required give and take for the UK and EU to move forwards together. And that is what we have done.’
Meanwhile, separate reports claimed that the Irish government is clashing with Brexit Secretary David Davis over the agreement reached with the EU over the Irish border. Davis claimed that the deal was merely a ‘statement of intent’ and may not be enforceable.
Irish Prime Minister Leo Varadkar hit back at this by asserting that the deal was both cast iron and politically bullet proof.
Today’s only UK data, the Rightmove House Price report, has shown a -2.6% decline in prices on the month, resulting in an annual figure of 1.2%.
While Brexit news is likely to remain the main cause of Pound movement today, investors will also be looking ahead to tomorrow’s UK inflation figures. Inflation is expected to hold at 3.0% on the year, but a surprise result could spark GBP volatility.
Euro Exchange Rates Weakened by Narrowing German Surplus
News that Germany’s trade surplus had narrowed significantly more than expected in October put the Euro under a little pressure ahead of the weekend.
An unexpected -0.4% decrease in exports and a 1.8% surge in imports saw the surplus decline from 25.8b to 18.1b.
While there are no influential ecostats from the Eurozone to contend with today, tomorrow sees the release of the German and Eurozone economic sentiment surveys for December.
The German index is believed to have fallen from 18.7 to 18.0. Such a result might leave the Euro weaker.
US Dollar Exchange Rates Supported by US Jobs Data
The US Dollar broadly strengthened before the weekend thanks to a better-than-forecast US non-farm payrolls report.
Economists had forecast that the data would show that the US economy added 200,000 positions in November, but it actually added 228,000.
However, the US Dollar’s gains were limited as average hourly earnings increased by less-than-expected and the University of Michigan confidence gauge revealed an unexpected decline in sentiment.
Given that the Federal Reserve is expected to increase interest rates at this week’s gathering, the US Dollar is likely to spend the first half of the week standing firm.
That being said, if Wednesday’s policy statement indicates that rates won’t be hiked as regularly in 2018, USD exchange rates could tumble.
Canadian Dollar Recovers BoC Related Losses
After sliding last week in response to a fairly dovish policy statement from the Bank of Canada (BoC), the Canadian Dollar managed to recoup some of its losses despite fluctuating oil prices.
This week is fairly devoid of influential data from Canada so CAD exchange rates will largely be left at the mercy of global economic developments.
Australian Dollar Exchange Rates Soften on Falling Iron Ore Prices
The tumbling price of iron ore, one of Australia’s key commodities, put Australian Dollar exchange rates on the back foot at the tail end of last week.
However, the ‘Aussie’ swiftly recovered losses against a broadly softening Pound and could bounce higher tomorrow if the National Australia Bank (NAB) business conditions and business confidence figures impress.
New Zealand Dollar Jumps on New RBNZ Governor
The New Zealand Dollar (NZD) is riding high this morning after surging in reaction to the appointment of a new Governor for the Reserve Bank of New Zealand (RBNZ).
Adrian Orr has been named as the next Governor and his extensive experience has led many to believe that the central bank will be in safe hands under his leadership.
The New Zealand Dollar is currently up by over 1% against the Pound, Euro, US Dollar and Euro.