More Upbeat Bank of England Interest Rate Forecasts Fail to Boost GBP
Pound Sterling was largely on poor form yesterday, despite Bank of England (BoE) policymakers stating that the Monetary Policy Committee (MPC) was now aiming for three interest rate hikes in as many years.
This beat earlier predictions of just two hikes between now and the end of 2020.
However, GBP exchange rates weakened as Governor Mark Carney refused to be drawn into giving a specific timeline, softening bets that the next hike could arrive in May.
Today’s 2017 fourth-quarter GDP figures could create some turbulence for Pound Sterling exchange rates if the second estimates for growth differ from original projections.
GBP/EUR Exchange Rate Slips Lower despite Worse-than-Expected Eurozone PMI Slowdown
The GBP/EUR exchange rate made minor losses yesterday, despite the Euro being on soft form itself.
As well as suffering from market disinterest ahead of the US Federal Open Market Committee (FOMC) meeting minutes, EUR was also undermined by a disappointing run of PMIs for February, which all weakened further-than-expected.
The European Central Bank (ECB) publishes the account of its January monetary policy meeting today, so the Euro could strengthen if the Governing Council discussed fixing a definite end date in place for the quantitative easing programme.
GBP/USD Exchange Rate Continues to Weaken after Upbeat FOMC Meeting Minutes
The Pound Sterling to US Dollar exchange rate slipped lower yesterday as USD remained confident ahead of the evening’s FOMC meeting minutes.
Further losses were prevented thanks to comments from Federal Reserve official Patrick Harker, who repeated his claim from January that the US economy only needed two interest rate hikes this year.
His comments were later contradicted by the meeting minutes, in which policymakers clearly signalled a need for further interest rate hikes – possibly at a pace faster than currently expected.
Scotiabank Oil Forecast and Cold Market Risk-Appetite Allows GBP/CAD to Hold Opening Levels
The Pound Sterling to Canadian Dollar exchange rate was able to hold onto opening levels yesterday, despite GBP weakness elsewhere.
Markets were perturbed by a recent forecast from Scotiabank that claimed delays to the approval of new oil pipelines would cost the Canadian economy around –C$10.7 billion over the course of 2018. The approach of US data also weighed on the ‘Loonie’.
Retail sales data from December could further weaken the Canadian Dollar today, given that forecasts are for a -0.1% decline month-on-month, or stagnation once auto sales have been excluded.
Australian Dollar Ignores Better-than-Expected Wage Data; GBP/AUD Advances
GBP/AUD was bucking the trend yesterday and recording solid gains.
The Australian Dollar was dragged lower by market focus on the evening’s US data, despite strong Australian wage growth figures.
These will have improved the monetary policy outlook, as the Reserve Bank of Australia (RBA) has made it clear that it won’t be looking to hike interest rates until inflation picks up.
Positive Forecasts for TPP Impact on New Zealand Economy Push GBP/NZD Lower
Unlike the other commodity currencies, the New Zealand Dollar seemed immune to poor risk-appetite yesterday, so the GBP/NZD exchange rate fell.
Markets were cheered by predictions that the new Trans Pacific Partnership deal could boost New Zealand’s GDP by 1% – equivalent to NZ$4 billion.
New Zealand retail sales figures for the fourth-quarter could boost NZD today, given that economists are expecting a sharp uptick to 1.3% after 0.2% growth in the previous quarter.