Pound Sterling (GBP) Exchange Rate Could Strengthen on Sturdy Manufacturing PMI
Pound Sterling (GBP) exchange rates remained stable over the bank holiday weekend due to thin trading volumes.
However, we could see a little bit more action during today’s session surrounding the release of the December UK manufacturing PMI report. Demand for Sterling could increase a little if the factory output index comes in strongly at 57.9, as the median market consensus suggests. Anything lower than 57.5 could weaken the Pound, while anything above November’s score of 58.2 could lead to larger gains.
Pound to Euro (GBP/EUR) Exchange Rate Down on German Inflation Print
The Pound to Euro (GBP/EUR) exchange rate softened last Friday when data showed that price pressures in Germany were higher-than-forecast last month. The December CPI report printed at 1.7%, beating expectations of 1.5%, thus painting a slightly rosier picture of the region’s economy.
The European Central Bank is likely to start reducing the pace of its asset purchasing scheme in September 2018, however, the bank does not see Eurozone inflation hitting the 2.0% target until past 2020, which could prevent policymakers from voting for higher interest rates anytime soon. But if inflation in the bloc continues to beat forecasts then we could see demand for the single currency rise as ECB rate hike bets grow.
Pound to US Dollar (GBP/USD) Exchange Rate Looks to Fed Minutes Report
The Pound Sterling to US Dollar (GBP/USD) exchange rate could gain during today’s session if the UK manufacturing report prints positively, however, we could see the ‘Greenback’ recover on Wednesday evening when the Federal Reserve releases the minutes report from its December meeting.
The US Dollar actually dipped following the Fed rate hike last month, due to unmet expectations of an upgrade to the bank’s 2018 policy projections. But if the minutes report reveals that policymakers consider the recent US tax bill as a hawkish event, then it could lead to a rebound in demand for the ‘Greenback’.
Pound to Canadian Dollar (GBP/CAD) Exchange Rate Soft on Strong Oil
Rising oil prices took the Pound lower by around five cents versus the commodity-sensitive Canadian Dollar last month but we could see a pullback over the next few weeks when the Forties North Sea oil pipeline is due to resume output.
When the repair work is completed it will add around 450,000 barrels per day to the global market, which could weigh on prices, and subsequently decrease demand for the ‘Loonie’.
Pound to Australian Dollar (GBP/AUD) Exchange Rate Suffering from Rising Commodity Prices
The Pound to Australian Dollar (GBP/AUD) exchange rate has softened in recent weeks and the Antipodean currency could continue to appreciate in the near-term. Strength in commodity prices has helped increase demand for the ‘Aussie’ and the Bloomberg commodity index rose 0.4% yesterday to mark the 11th consecutive day of gains.
Pound to New Zealand Dollar (GBP/NZD) Exchange Rate Could Soften Further
The New Zealand Dollar is another commodity-sensitive currency that has benefited, and could continue to benefit from, a surge in commodity prices. GBP/NZD has plunged seven cents in the last 20 days and the ‘Kiwi’ could rack up more gains in January.