Pound Sterling Exchange Rates Weakened as Officials Clash over Brexit Plans to Leave Customs Union

Pound Sterling Unsettled by Arguments over EU Customs Union

Argument over the EU customs union kept the Pound on weak form yesterday. International Trade Secretary Liam Fox claimed that retaining customs union membership after Brexit would be to ‘sell out’ the UK’s interests, but former trade Chief Sir Martin Donnelly claimed it was more like giving up a three-course meal in favour of a packet of crisps.

Today’s UK consumer confidence figures have already been released and may largely be ignored anyway as markets turn their attention to tomorrow’s UK manufacturing PMI.

Slower-than-Expected German CPI Helps GBP/EUR Exchange Rate Recover Losses

GBP/EUR spent the morning on the decline, although losses were swiftly recovered in the afternoon after German consumer price index figures showed a greater-than-expected slowdown in year-on-year price growth. The index weakened from 1.6% to 1.4%.

Today could see plenty of Euro volatility, given that German unemployment figures and the Eurozone consumer price indices for February are all set for release.

Confidence from New Federal Reserve Chair Pushes GBP/USD Lower

An upbeat outlook from new Federal Reserve Chair Jerome Powell and a strong unexpected rise in US consumer confidence during February kept the GBP/USD exchange rate on weak form yesterday. However, the Pound was able to recover some of its losses at the end of the session as markets judged the Sterling sell-off was overdone.

Fourth-quarter US GDP figures are set for release today, which could firm or undermine the odds of an interest rate hike next month.

GBP/CAD Clings to Opening Levels ahead of Morneau Budget

GBP/CAD fluctuated narrowly yesterday before making last-minute gains as the Canadian Dollar weakened in response to the latest US Dollar strength. Markets were also cautious ahead of the evening’s Federal Budget from Finance Minister Bill Morneau.

The Canadian raw materials price index for January could provide an insight into the path of future inflation; rising material costs may eventually be passed onto consumers by manufacturers, pushing prices higher.

Last-Minute Recovery for GBP/AUD Exchange Rate as USD Strengthens

As was the case against most of the other majors, the Pound weakened versus the Australian Dollar yesterday but later made sharp gains as a strengthening US Dollar pushed AUD lower.

If the fallout from the latest Chinese manufacturing PMI released very early this morning has died down, the Australian Dollar may find itself on muted form today as markets await tonight’s AiG performance of manufacturing index for February.

Cooling Risk-Appetite allows GBP/NZD Exchange Rates to Make Late Gains

The GBP/NZD exchange rate was less volatile than other Sterling pairings yesterday, but it still showed the same pattern of weakening at first and then recovery at the end of the day.

The New Zealand terms of trade index for the fourth-quarter is set for release tonight; this measures the difference between import costs and export revenue – a rising percentage above zero shows that the nation has made more from exporting than it has paid on imports.

Laura Parsons

Laura has been working in the financial services sector since 2012 and provides currency news updates for a number of online and print publications. Over the years she has produced exchange rate analysis for publishers like French Property News, The Express, The Telegraph and Forbes.

Contact Laura Parsons