GBP News and Forecast: Hawkish ECB Minutes Send Pound Euro (GBP/EUR) Exchange Rate Lower

Pound Sterling Exchange Rates Boosted by Farage Second EU Referendum Remarks

Pound Sterling (GBP) exchange rates could drift higher over the coming weeks if support grows for a second referendum on Britain’s membership of the European Union.

Demand ticked a little higher yesterday following comments from an unlikely source: former UKIP chief and career Eurosceptic Nigel Farage admitted that ‘maybe – just maybe… we should have a second referendum’. Farage’s motivation for holding a second vote was to silence those opposed to Brexit and send Tony Blair ‘off into total obscurity’, with the former UKIP leader confident that Britons would still back leaving the EU.

However, the Pound would be expected to appreciate if talk of a second referendum were to gain momentum, as this would obviously raise the chances of Britain remaining in the EU’s single market and customs union.

Pound to Euro (GBP/EUR) Exchange Rate Slides on Hawkish ECB Minutes

The Pound to Euro (GBP/EUR) exchange rate softened by around half a cent yesterday as markets reacted to hawkish sentiment in the European Central Bank’s (ECB) latest minutes report.

The single currency rallied across the board in response to the suggestion that the ECB could alter its forward guidance over the next few months to prepare markets for a withdrawal of stimulus later in the year. The report was more hawkish than most traders had anticipated and the Euro gained ground on hopes that the ECB could completely unwind its QE scheme in September.

Pound to US Dollar (GBP/USD) Exchange Rate Softens Ahead of US CPI Inflation Report

Talk of a second Brexit referendum helped push the Pound higher by around 30 pips versus the US Dollar (GBP/USD) yesterday. However, we could see the ‘Greenback’ recover if today’s December US consumer price index report impresses.

Analysts are expecting the US inflation index to slow from 2.2% to 2.1%, which could weigh further on demand for the US Dollar by reducing the likelihood of near-term rate rises from the Federal Reserve. But if the CPI were to come in above consensus, it could embolden the Fed hawks and propel the embattled ‘Greenback’ higher across the board.

Pound to Canadian Dollar (GBP/CAD) Exchange Rate Touches 1-Week High

The Pound to Canadian Dollar (GBP/CAD) exchange rate touched a weekly high yesterday despite another jump in the price of Canada’s most-lucrative export.

Crude oil rose to a three-year high of US$70 a barrel yesterday following comments from UAE oil minister and OPEC President Suhail al-Mazrouei suggesting that the organisation of the petroleum exporting countries (OPEC) was committed to limiting output until the end of the year. The commodity-correlated ‘Loonie’ often mimics movements in the oil industry, but this was not the case during yesterday’s session.

Pound to Australian Dollar (GBP/AUD) Exchange Rate Slides -50 Pips

The Pound declined by around half a cent against the ‘Aussie’ Dollar yesterday as traders responded positively to stronger-than-anticipated retail sales data down under.

The Australian Dollar spiked immediately after the November retail sales report came in at 1.2%, smashing forecasts of 0.4%.

Pound to New Zealand Dollar (GBP/NZD) Exchange Rate Down -100 Pips

The Pound to New Zealand Dollar (GBP/NZD) exchange rate tumbled by around -100 pips yesterday to strike its lowest level in almost three months.

Marking the seventh consecutive day of losses for GBP/NZD, yesterday’s decline puts Sterling firmly in bearish territory versus the ‘Kiwi’.

Josh Ferry Woodard

After leaving university in 2011 Josh briefly worked as a currency analyst in the South West of Cornwall. Josh continued monitoring the currency markets and publishing exchange rate analysis after moving to London in 2012, with a particular focus on the impact of economic and political stimuli on forex. Josh was a regular contributor to The Telegraph’s weekly currency feature for several years.

Contact Josh Ferry Woodard