Prospect of Peace on Korean Peninsula Weakens Pound Sterling Exchange Rates versus Commodity Currencies

Pound Sterling Slips Lower as Markets React to Vauxhall Brexit Warning and Await BoE Haldane Speech

The Pound was largely on weak form yesterday, hampered by a relatively quiet UK economic data calendar and a warning from car maker Vauxhall that a lack of Brexit clarity could threaten the future of its Ellesmere Port manufacturing plant, which employs around 1,800 people.

This comes just a day after Airbus warned that it may have to reconsider its position in the UK if it does not receive clarity over post-Brexit customs rules soon.

Markets were also staying away from the Pound as Bank of England (BoE) Chief Economist Andy Haldane was due to give a speech yesterday evening, which many hoped might contain clues regarding the outlook for the May monetary policy meeting.

Halifax house price data for February is the only release on the UK data calendar today.

GBP/EUR Exchange Rate Dips below Opening Levels on Strong Eurozone Retail PMIs

The Pound slipped lower against the Euro yesterday, with GBP/EUR undermined by a set of above-forecast Eurozone retail PMIs, which all showed improvement on the January readings.

The Italian index rose from a contraction score of 47.3 to a marginal growth score of 50.4, the French index climbed from 51 to 51.8, the German measure rose from 53 to 53.8 and the Eurozone-wide measure climbed from 50.8 to 52.3.

Eurozone household consumption figures for 2017 Q4 may boost the Euro if they show an uptick in the growth rate as this would signal a rise in inflation is incoming.

GBP/USD Rises as Markets Turn to Risk-Assets on Potential for De-escalation between Korean Powers

The GBP/USD exchange rate climbed yesterday after the news that North and South Korea would hold talks boosted investor confidence and saw markets rushing for risk-assets. North Korea has even signalled that it will halt all nuclear tests in the event the US agreed to talks and that it has no reason to possess nuclear weapons if it feels secure from military threat.

Markets will use the ADP employment change figure as a bellwether for the more influential US non-farm payroll report on Friday, so a solid result here would undermine the GBP/USD exchange rate.

News of Talks between North and South Korea Boost Risk Appetite; GBP/CAD Slips Lower

The GBP/CAD exchange rate tumbled yesterday thanks to the lack of UK or US data to weigh on the Canadian Dollar. CAD was also boosted – along with its other commodity-correlated peers – by news that North and South Korea have agreed to hold a summit in April to discuss closer ties.

The Bank of Canada (BOC) announces its latest monetary policy decisions this afternoon.

GBP/AUD Exchange Rate Weakens as Korea Talks Boost Australian Dollar despite Cautious RBA Message

The GBP/AUD exchange rate weakened yesterday, even though the day’s policy announcements from the Reserve Bank of Australia (RBA) hardly proved encouraging.

The RBA stated that it was waiting for an uptick in wage growth before considering a move on interest rates, but then stated that wage growth is likely to remain sluggish.

Nonetheless, news that North and South Korea would hold their first summit in a decade boosted the Australian Dollar as investors felt confident enough to buy into high-risk assets.

The Australian Dollar will likely spend the rest of today reacting to the fourth-quarter GDP figures released just after midnight today.

GBP/NZD Slumps despite Weakening Dairy Prices at Latest Global Auction

Risk appetite sent the New Zealand Dollar soaring yesterday, causing the GBP/NZD exchange rate to slump.

Markets were ignoring the results of the latest Global Dairy Trade auction, which revealed a -0.6% decline in the average winning price of New Zealand’s primary export.

Hopes of progress in resolving the tensions between North Korea, South Korea and the US had investors feeling confident enough to take risks on high-yield currencies.

New Zealand manufacturing activity data for 2017 Q4 is set for release later tonight.

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