More Strong Gains for Pound Sterling on Trump Trade Prediction
Disappointing home lending and industry sales data from the UK yesterday morning failed to undermine Pound Sterling.
GBP was on strong form in the afternoon after the meeting between Prime Minister Theresa May and US President Donald Trump.
There had been fears that the ‘special relationship’ between the UK and US had been under strain recently, but Trump was full of praise and predicted that there would be a sharp increase in trade between the two nations.
Expect volatility for the Pound today as fourth-quarter UK GDP figures for 2017 will be released in the morning and Bank of England (BoE) Governor Mark Carney will give a speech in the afternoon.
Draghi’s Missing Pessimism at ECB Post-Meeting Press Conference Undermines GBP/EUR
Despite the strength seen for GBP elsewhere, the Pound Sterling to Euro exchange rate slumped into negative territory yesterday.
The European Central Bank (ECB) announced its latest monetary policy decisions, having opted once again to make no changes. However, the Euro was sent racing higher across the board after ECB President Mario Draghi failed to offer up his traditional post-meeting dovish commentary.
The positivity generated yesterday by Draghi’s comments – or, rather, the lack of negative ones – on monetary policy could continue to push EUR higher today. The ECB Survey of Professional Forecasters may provide further support if the conclusions are positive.
Further Comments from US Treasury and Trade Secretaries Keep GBP/USD on the Advance
While US Treasury Secretary Steven Mnuchin was yesterday trying to backpedal on his comments about preferring a weak US Dollar, Commerce Secretary Wilbur Ross doubled down on his tough rhetoric regarding trade.
‘People are using some predatory practices against us and we’re not flinching from that,’ he claimed, which did nothing to soften the fears sparked the day before that the US administration still holds strongly protectionist views. The Pound Sterling to US Dollar exchange rate was able to record gains in the region of half a percent.
High-tier data on tap for the US today includes the Q4 GDP figures and later durable goods orders data.
GBP/CAD Gains Slowed as USD Weakness Boosts Crude Oil Prices
The ‘Loonie’ was able to make gains versus some of its peers yesterday, as the weakness in the US Dollar was pushing crude oil prices up sharply.
However, the Pound Sterling to Canadian Dollar exchange rate was still able to advance because of Trump’s comments on UK-US trade.
Canadian retail sales growth slowed from 1.6% to 0.2% on the month in November, although excluding autos retail sales grew 1.6% instead of the forecast uptick from 0.8% to 0.9%.
Canadian consumer price index figures for December will be released this afternoon and so GBP/CAD could see notable volatility.
GBP/AUD Exchange Rate Stuck Around Opening Levels despite Pound Support
The GBP/AUD exchange rate ended the day locked around opening levels, with weakness in the US Dollar and strength in the Euro cancelling each other out to keep market risk appetite largely unchanged.
Polarising Forces Keep Risk Appetite Steady; GBP/NZD Manages Only Minor Gains
The New Zealand Dollar was on weak form virtually across the board yesterday, although the GBP/NZD exchange rate was only able to eke out small gains.
The severe weakness of the US Dollar – and the fact the Japanese Yen was also soft on approaching domestic inflation data – failed to prop up demand for high-yield currencies, given that the Euro was enjoying a strong rise.