Pound Sterling (GBP) Exchange Rates Fluctuates as BoE Governor Talks Financial Services Brexit Deal
Pound Sterling (GBP) exchange rates fluctuated yesterday as Bank of England Governor Mark Carney refrained from discussing monetary policy in his testimony to parliament. The Governor said that European banks would not be forced to create costly British subsidiaries to continue selling their services after Brexit and argued that regulation has strengthened significantly over the last decade to the extent that a special financial services trade deal could be implemented.
If such a deal were agreed it would likely lead to an appreciation in Sterling because of the positive implications for the UK economy, however, it was only Tuesday of this week that chief EU negotiator Michel Barnier argued that a sector specific Brexit deal would not be possible.
Pound to Euro (GBP/EUR) Exchange Rate Slides to 21-Day Low
The Pound to Euro (GBP/EUR) exchange rate weakened by around a third of a cent yesterday to strike its lowest level for around three weeks. It seems that with no notable Euro-specific developments, the reason for GBP/EUR’s slide was a rise in EUR/USD, which subsequently took the single currency higher against Sterling.
Today’s only interesting event on the European calendar is the UK public sector borrowing report, which is tipped to show that the British government was forced to borrow £9 billion in November to balance the books, up from £8 billion previously. The news is unlikely to have a marked negative impact on demand for the Pound but it could easily be seen as a mildly bearish signal.
Pound to US Dollar (GBP/USD) Exchange Rate Ticks Higher on Profit Taking
The old adage ‘buy the rumour, sell the fact’ appeared to come into play for the Pound Sterling to US Dollar (GBP/USD) exchange rate yesterday. The Pound rallied by around a quarter of a cent versus the US Dollar as US policymakers moved towards passing President Donald Trump’s sweeping tax reform. The ‘Greenback’ had appreciated in the run-up to the tax bill, as it is expected to boost short-term growth and inflation prospects. However, yesterday’s fall in the ‘Greenback’ suggests that investors are now consolidating their positions to take profit from the trade.
Later today US third quarter GDP is predicted to print at 3.3%, which could boost ‘Cable’ as UK annualised growth was much lower at 1.5% during that same period.
Pound to Canadian Dollar (GBP/CAD) Exchange Rate Softens Ahead of Canadian Inflation Report
The Pound to Canadian Dollar (GBP/CAD) exchange rate softened slightly yesterday ahead of this afternoon’s Canadian consumer price index report. The ‘Loonie’ increased in demand because investors predict that inflation accelerated from 1.4% to 2.0% in November, which could persuade the Bank of Canada to consider raising interest rates sooner-than-anticipated.
A Canadian retail sales report is also tipped to show sales growth of 0.3% in October, up from 0.1% in September.
Pound to Australian Dollar (GBP/AUD) Exchange Rate Stablises
The Pound stabilised versus the Australian Dollar yesterday following a period of decline that took GPB/AUD down by around five cents from the 17-month high struck at the start of the month.
A recent upbeat statement on the Australian economy from the Reserve Bank of Australia suggests that Sterling may struggle to reclaim the 8th December peak, unless we are treated to some significant GBP-positive news.
Pound to New Zealand Dollar (GBP/NZD) Exchange Rate Down after Sturdy New Zealand GDP
The Pound to New Zealand Dollar (GBP/NZD) exchange rate plummeted -100 pips following the latest New Zealand GDP report, which showed that domestic GDP expanded at an annualised rate of 2.7% in the third quarter. The result bolstered the appeal of the ‘Kiwi’ as it exceeded market expectations of 2.4%.