Pound Sterling Exchange Rates Mixed as Boris Johnson Speech Presses ‘Hard Brexit’ Agenda
The Pound was on mixed form yesterday, with a lack of UK economic data keeping Sterling on the back foot.
Markets weren’t overly impressed by Foreign Secretary Boris Johnson’s speech on Brexit. The speech had been advertised as an attempt to build bridges between Leavers and Remainers, but there was no sign of a softening of Johnson’s ‘Hard Brexit’ stance.
A slump in risk appetite following key US data, however, kept demand for Sterling firm.
Latest US Data Supports both Pound and Euro, so GBP/EUR Exchange Rates Remain Flat
GBP/EUR was stuck around opening levels, as the latest developments from the US kept markets on edgy form and caused a rout to stable currencies. Both Pound Sterling and the Euro benefitted from this.
While the day’s fourth-quarter GDP figures for the Eurozone printed on forecast, Italy’s missed forecasts by ten basis points on the year and the quarter.
German GDP beat expectations and Eurozone industrial production clocked in strongly above forecasts.
Speeches from European Central Bank (ECB) officials Yves Mersch and Sabine Lautenschläger, as well as Eurozone trade balance data, could create some movement for the Euro today.
GBP/USD Exchange Rate Strengthens as Strong US Inflation Data keeps Stock Market Panic Alive
The Pound Sterling to US Dollar exchange rate was able to record solid gains yesterday, despite stronger-than-expected US inflation and wage growth data.
This may have firmed the odds of a March interest rate hike, but it also threatens to keep the US stock market panic alive.
Equity investors are concerned that strengthening inflation could push US interest rates up faster-than-expected (ironically what currency investors should be happy about).
If the slumps seen in the stock market worsen, this could harm the US economy and – ironically – cause the Fed to slow down its pace of interest rate hikes.
Against this backdrop of global volatility, investors were looking for safe-havens outside of USD, such as the Japanese Yen.
Industrial and manufacturing production data and jobless claims figures may not be sufficiently-impactful to support USD if markets are still seeking safer-havens today.
Canadian Dollar Softened by Weak Global Risk-Appetite; GBP/CAD Moves Higher
GBP/CAD crept higher yesterday, with the Canadian Dollar softened by the continued jitters present on the stock market.
Crude oil prices were slumping again, despite the weakness of the US Dollar, and the day’s house price inflation data was of little interest to markets given the wider global developments to focus on.
Today sees the release of the ADP Canadian payrolls report.
GBP/AUD Exchange Rate Edges Up as US Inflation Data Weighs on Australian Dollar
The Pound was able to make small gains versus the Australian Dollar thanks to the market volatility caused by the strong US inflation data; which somewhat ironically helped AUD/USD remain at opening levels.
There was no Australian data and the recent Westpac consumer confidence survey showed that stock market uncertainty had weighed on Australian household sentiment, so the outlook could take a hit if things on the equity markets don’t calm down soon.
The Australian Dollar could find itself stuck in limbo tomorrow, as high-impact employment data will have been released shortly after midnight.
Reserve Bank of Australia (RBA) Governor Philip Lowe will appear before a Parliamentary committee late in the evening.
Rise in RBNZ Inflation Outlook Sees GBP/NZD Exchange Rate Slump
Risk appetite may have been weakening the other commodity currencies yesterday, but the New Zealand Dollar was having none of it.
GBP/NZD slumped, thanks to yesterday’s early-morning release of the Reserve Bank of New Zealand (RBNZ) inflation expectation for the two years from 2018 Q1.
The measure rose from 2.02% to 2.11%, signalling that perhaps consumer price growth was going to trend above RBNZ forecasts.
The Business NZ manufacturing PMI is due for release tomorrow night.