Pound Sterling Exchange Rates Climb over 1% on Hopes for ‘Soft Brexit’
The Pound Sterling to US Dollar (GBP/USD) exchange rate romped to its best levels since the UK’s vote to Brexit on Friday, with Sterling also advancing by over 1% against the Australian, New Zealand and Canadian Dollars.
The British currency initially rose in response to former UKIP chief Nigel Farage’s comments about a second Brexit referendum, with the Pound extending gains after the Spanish and Dutch finance ministers asserted that they would be supporting a Brexit deal which maintained close ties between the UK and EU.
UK data is lacking until tomorrow, but fresh Brexit reports could trigger Sterling movement.
Pound to Euro (GBP/EUR) Exchange Rate Edges Higher Despite German Coalition Progress
The Pound to Euro (GBP/EUR) exchange rate did strengthen on Friday, but its gains weren’t substantial.
The Euro remained buoyed by the hawkish minutes from the European Central Bank’s (ECB) last policy meeting and the prospect that monetary policy could be adjusted sooner than previously forecast.
A breakthrough in German coalition talks also proved Euro-supportive.
Influential data for the Eurozone is in short supply today, but Tuesday’s German inflation report could prove currency-moving if the final figure deviates from the initially forecast 1.7%. A lower reading could dent policy tightening hopes and weaken the Euro.
Pound to US Dollar (GBP/USD) Exchange Rate Hits Best Levels since EU Referendum
The Pound Sterling to US Dollar (GBP/USD) exchange rate jumped to its highest levels since 2016’s EU referendum before the weekend despite an uptick in US consumer price pressures.
The nation’s core consumer price index rose by 0.3% on the month and 1.8% on the year in December, exceeding respective forecasts of 0.2% and 1.7%. Non-core inflation dipped from 2.2% to 2.1% as anticipated.
But these results, on top of mixed retail sales figures, failed to lend the US Dollar much support against the broadly strengthening Pound. The Euro’s buoyancy also restrained USD exchange rates.
This week’s data calendar is pretty bear in terms of high-impact US releases, but a run of speeches from Federal Reserve officials will be of interest. Any remarks which up the odds of a March rate hike would be USD supportive.
Pound to Canadian Dollar (GBP/CAD) Exchange Rate up before BoC Decision
With Sterling broadly strengthening before the weekend, the Pound to Canadian Dollar exchange rate was able to rally over 1%.
Canadian Dollar losses also occurred as oil prices fell from a three-year high. However, CAD exchange rates could spike later this week if the Bank of Canada (BoC) indicates that it plans to continue its rate hiking cycle in 2018 at Wednesday’s policy meeting.
Pound to Australian Dollar (GBP/AUD) Exchange Rate Bounces Back
Although forecast-smashing Australian retail sales data sent the Pound Sterling to Australian Dollar exchange rate lower on Thursday, GBP/AUD had more than recovered losses before European markets closed on Friday.
The Australian Dollar dropped 1% against the Pound and also recorded losses of 0.7% against the Euro.
The Westpac Consumer Confidence index, due out tomorrow, is likely to be one of the main causes of Australian Dollar movement in the week ahead. An increase in sentiment would be AUD positive.
Dairy Price Auction to Drive Pound to New Zealand Dollar (GBP/NZD) Exchange Rate
The Pound Sterling to New Zealand Dollar (GBP/NZD) exchange rate surged on Friday, and the pairing could swiftly extend gains if the price of dairy produce (New Zealand’s key commodity) declines at the latest Global Dairy Trade auction.
That being said, dairy prices rose at the first auction of 2018, and the ‘Kiwi’ could climb if this trend continues.