Pound Sterling (GBP) Exchange Rates Strengthen on Hopes for UK Growth
Pound Sterling (GBP) exchange rates got off to a strong start to the week thanks to comments from former Conservative Treasury Minister Lord Jim O’Neill.
O’Neill, who supported the Remain campaign, asserted that the UK is performing better than anticipated in the wake of the nation’s vote to Brexit.
The former minister noted: ‘I certainly wouldn’t have thought the UK economy would be as robust as it currently seems. That is because some parts of the country, led by the North West [of England], are actually doing way better than people seem to realise or appreciate. As well as this crucial fact, the rest of the world is also doing way better than many people would have thought a year ago, so it makes it easier for the UK.’
He also indicated that future output may well eclipse the anticipated impact of Brexit on UK GDP outlined in an assessment by Cambridge Econometrics.
The remarks helped Pound Sterling advance by over 0.5% against a number of the majors ahead of the publication of today’s UK public sector net borrowing figures.
Sterling held gains in spite of the fact that the International Monetary Fund (IMF) negatively revised its forecasts for UK GDP in 2019.
Pound Sterling to Euro (GBP/EUR) Exchange Rate Higher on German Coalition Reports
The Pound Sterling to Euro (GBP/EUR) exchange rate advanced by over 0.5% on Monday.
While Sterling was supported by an upbeat UK growth assessment, the Euro was undermined by speculation surrounding Germany’s ongoing coalition talks.
Although the nation’s SPD party has agreed to begin formal talks with Chancellor Angela Merkel, many SPD members remain reluctant to enter a grand coalition.
We might see the Euro recover lost ground this morning however as the ZEW economic sentiment surveys for Germany and the Eurozone are expected to show improvement.
US Dollar (USD) Exchange Rates Down on US Government Shutdown
The US government shutdown kept US Dollar (USD) exchange rates under pressure on Monday, with GBP/USD once again approaching its best levels since the EU referendum.
However, the Senate voted to end the shutdown, with Republicans and Democrats supporting a temporary funding bill and promising to have a debate on the contentious issue of immigration.
Pound to Canadian Dollar (GBP/CAD) Exchange Rate Still Suffering from NAFTA Speculation
The possible collapse of the North American Free Trade Agreement (NAFTA) weakened the Canadian Dollar (CAD) on Monday.
Officials are due to gather for the next round of talks this week. If the talks don’t go well, the Canadian Dollar could spiral lower before the weekend.
Of course Canada’s inflation and retail sales data will also have an impact on Canadian Dollar exchange rates this week. An uptick in consumer spending or consumer price pressures would be Canadian Dollar-supportive.
Australian Dollar (AUD) Exchange Rates Give Up Gains Despite IMF Growth Revision
The Australian Dollar (AUD) weakened against the US Dollar (USD), Pound (GBP) and New Zealand Dollar (NZD) overnight.
The currency had previously been supported by the International Monetary Fund’s (IMF) upgrade to global growth forecasts, but with the US government shutdown coming to an end and the ANZ weekly consumer confidence index falling from 123.5 to 119.4, the Australian Dollar experienced a reversal.
Today’s Westpac Leading Index may inspire further AUD movement.
New Zealand Dollar (NZD) Exchange Rates Supported by Services PMI
The New Zealand Dollar (NZD) strengthened against the Pound (GBP) and Australian Dollar (AUD) overnight as New Zealand’s Performance of Services index came in at 56.0 in December, down slightly from November’s reading but still in solid expansion territory.
Business New Zealand Senior Economist Craig Ebert said of the result: ‘this above-average outcome was doubly significant, considering the Performance of Manufacturing Index (PMI) decelerated sharply in December. Had the PSI done so too, we would have been much more concerned that the economy might be choking back a bit, following the election.’
New Zealand’s next influential ecostats, the nation’s credit card spending and inflation figures, aren’t due out until Wednesday.