Pound Sterling Exchange Rates Recover Ground on BoE Wage Growth Forecasts
A speech from a Bank of England (BoE) official lent Pound Sterling (GBP) exchange rates support on Wednesday.
According to Monetary Policy Committee (MPC) member Michael Saunders, UK pay growth should pick up in 2018.
Stagnant earnings have been a sticking point for the BoE, so an improvement could lead to higher interest rates in the not-so-distant future.
Saunders commented: ‘I consider it likely that interest rates will need to rise further over time. [The BoE will] be gradually lifting our foot off the accelerator, with no need to put the brakes on.’
The next UK data of note will be Friday’s retail sales figures. A solid increase in consumer spending at the end of 2017 would be Pound-supportive, but falling sales would undermine demand for the British currency before the weekend.
Pound Sterling to Euro (GBP/EUR) Exchange Rate up ½ a Cent
The Pound Sterling to Euro (GBP/EUR) exchange rate climbed by half a cent on Wednesday as slowing inflation in the Eurozone weighed on demand for the common currency.
Consumer price pressures eased to 1.4% in December, far below the European Central Bank’s (ECB) 2% target.
Although a separate report revealed a solid uptick in Eurozone construction output in November, the Euro eased lower against most the majors.
In the hours ahead speeches from various ECB officials, including Bundesbank President Jens Weidmann and board member Benoit Coeure, could inspire EUR volatility. Any hints about tightening monetary policy will be well received.
Pound to US Dollar (GBP/USD) Exchange Rate Bounces Back
The Pound Sterling to US Dollar (GBP/USD) exchange rate recouped Tuesday’s losses following the publication of mixed US data.
Although the 0.9% month-on-month increase in industrial production exceeded the forecast increase of 0.5%, November’s figure was negatively revised to -0.1%.
Manufacturing production, meanwhile, rose by just 0.1%. A 0.3% increase in output had been anticipated.
Pound to Canadian Dollar (GBP/CAD) Exchange Rate Jumps after BoC Rate Hike
The Pound Sterling to Canadian Dollar (GBP/CAD) exchange rate jumped on Wednesday as any positivity inspired by the Bank of Canada’s (BoC) rate hike was undermined by uncertainty surrounding the future of the North American Free Trade Agreement (NAFTA).
The BoC lifted interest rates to 1.25%, as expected, but commented: ‘Recent data have been strong, inflation is close to target and the economy is operating roughly at capacity, however uncertainty about the future of NAFTA is weighing increasingly on the outlook.’
Today’s Canadian ADP employment report could inspire further Canadian Dollar movement, and an upbeat result could help CAD recoup losses.
Pound to Australian Dollar (GBP/AUD) Exchange Rate Static after Aussie Unemployment Rise
The Pound Sterling to Australian Dollar (GBP/AUD) exchange rate gained following the release of Australia’s latest employment data before levelling out as the European session opened.
Although the Australian economy added considerably more positions than forecast in December (34.7k rather than 15.0k) a 0.2% increase in the participation rate raised the overall unemployment level from 5.4% to 5.5%.
Separate data showed that Australia’s consumer inflation expectation held at 3.7%.
Meanwhile, China – Australia’s largest trading partner – published mixed growth and retail sales data. Although the rate of quarterly expansion was slightly below forecasts (at 1.6% rather than 1.7%), year-on-year GDP unexpectedly held at 6.9% rather than drifting to 6.8%.
Year-on-year retail sales picked up to 10.2%, but year-to-date sales dipped from 10.3%.
As that’s it for influential Australian data this week, further AUD shifts will be the result of general risk appetite.
Pound to New Zealand Dollar (GBP/NZD) Exchange Rate Dips before Manufacturing Data
The Pound Sterling to New Zealand Dollar (GBP/NZD) exchange rate declined 0.3% overnight despite REINZ house sales data reporting a -10.1% drop as the British currency drifted away from Wednesday’s highs.
Later today New Zealand will publish its manufacturing PMI. The gauge came in at 57.7 in November, a rate comfortably above the 50 mark separating growth from contraction.
Another solid reading would be NZD supportive.