Pound Sterling Races to Multi-Month Highs on Strong Employment Data
The Pound rocketed higher yesterday after some strong UK employment data boosted the odds of at least one interest rate hike from the Bank of England (BoE) during the course of 2018.
Unemployment remained at a four decade low of 4.3%, while the number of people employed in the three months on the year to November unexpectedly rose by 102,000 against economists’ expectations of a -10,000 drop. Further providing support for the Pound was a surprise uptick in the rate of wage growth, as pay rose 2.4% instead of 2.3%.
Loans for house purchase and Confederation of British Industry (CBI) data are set for release today; more positive results could continue to drive BoE rate hike bets upwards.
GBP/EUR Reaches Eight-Month High despite Solid Eurozone PMI Data
The Pound Sterling to Euro exchange rate struck an eight-month high on the UK’s labour market data.
A slew of positive Eurozone PMIs wasn’t enough to put the Euro in positive territory, even though unexpected rises in the composite and services readings for France, Germany and the Eurozone suggested the currency Bloc economy could be on track for quarter-on-quarter expansion of 1% in the first three months of 2018.
The approach of today’s European Central Bank (ECB) monetary policy announcements kept markets reluctant to buy into the Euro.
Today’s announcement of ECB decisions will be followed by a press conference from President Mario Draghi. If he appears characteristically downbeat the Euro could tumble.
Market Fears of US Protectionism Help GBP/USD Climb to Post-Referendum High
GBP/USD struck a new post-referendum high yesterday. Markets were unsettled by comments from US Commerce Secretary Wilbur Ross at the World Economic Forum (WEF) event in Davos.
Ross indirectly accused other nations of protectionism and claimed that ‘US troops are now coming to the ramparts’ in a trade war he said had been ongoing for some time.
Additionally, Treasury Secretary Stephen Mnuchin claimed a weak US Dollar was good trade, which suggests that a strong US Dollar would negatively impact the US economy. USD unsurprisingly slumped, with the Pound ending the day on track for gains of around 1.5%.
The advance goods trade balance will be the most influential on today’s busy US data calendar.
Noncommittal Comments from US on NAFTA Deal Enable GBP/CAD Gains
The Pound Sterling to Canadian Dollar exchange rate surged yesterday, although the Canadian Dollar was broadly weak anyway.
Noncommittal comments from US Treasury Secretary Stephen Mnuchin at Davos regarding the North American Free Trade Agreement (NAFTA) unsettled investors. Mnuchin claimed that the US was happy to operate on a free-trade basis with those who want to reciprocate. This could have been a veiled dig at Canada’s dairy industry subsidies.
Canadian retail sales data for November is set for release today; a slowdown is forecast, so the ‘Loonie’ may be in for a decline.
Strong Outlook from Australian CEOs Fails to Prevent GBP/AUD Gains
While the Pound was still able to gain strongly versus the Australian Dollar, its advance was not as impressive as seen elsewhere thanks to tailwinds for AUD.
A survey of Australian CEOs found that the private sector holds the most optimistic outlook for the Australian economy for a year ahead in five years, although the thorn in the rose was that wage growth is not expected to accelerate.
GBP/NZD Leaps Higher as Markets Await NZ Consumer Price Index Data
GBP/NZD raced higher yesterday thanks to the UK’s labour market data, although weakness in the US Dollar was keeping risk appetite firm and therefore preventing Sterling from recording further gains.
Last night’s fourth-quarter New Zealand consumer price index figures could continue to create volatility for the ‘Kiwi’ today.