Lack of UK Data Leaves Vulnerable Pound Exchange Rates to Decline on Gloomy Forecasts for Post-Brexit Trade

Empty Data Calendar Leads Pound Sterling Vulnerable to Fears over Post-Brexit Trade

The Pound was on weak form yesterday, with nothing on the UK data calendar to distract markets from focusing on the long-term Brexit outlook. With jitters over the risks of a global trade war being sparked by President Donald Trump’s protectionist policies still gripping many investors, markets were once again fretting over the likelihood that the UK can arrange the kind of trade deal that it needs to prosper after Brexit.

A slew of UK data is set for release today, including the National Institute for Economic and Social Research (NIESR) GDP estimate for February.

Draghi’s Warnings over US Protectionism Allow GBP/EUR Exchange Rate to Inch Higher

The latest European Central Bank (ECB) meeting gave investors some small measure of hope, but overall the Euro weakened and the GBP/EUR exchange rate was able to inch higher.

Policymakers dropped a key phrase regarding the potential for quantitative easing to be extended or increased should economic conditions warrant it from the latest statement on monetary policy.

However, ECB President Mario Draghi then warned that protectionism and financial deregulation in the US could threaten the world economy.

German trade and industrial production figures are set for release today. Also due out are Eurozone labour costs for the fourth-quarter of 2017, which could boost the inflation outlook if they reveal rising wage expenses.

GBP/USD Exchange Rate Slumps as Markets Look Ahead to Non-Farm Payrolls Report

The US Dollar was on solid form yesterday, meaning that the GBP/USD exchange rate sank.

Hopes of the strong reading from today’s non-farm payrolls report helped to keep appetite for the US Dollar firm, while markets were also beginning to question whether Donald Trump’s proposed tariffs on steel and aluminium will be as severe as feared, or even if they will materialise at all.

The US non-farm payrolls report could send the US Dollar soaring this afternoon if it meets forecasts of solid employment growth.

Signs US Will Accept Canada from Metal Tariffs Weaken GBP/CAD

The GBP/CAD exchange rate slipped lower yesterday. The Canadian Dollar was boosted by stronger-than-expected housing starts figures for February and a 5.6% surge in the number of building permits issued during January.

Also propelling the Canadian Dollar higher was the news that the US was likely to exempt Canada from its metal tariffs while the North American Free Trade Agreement (NAFTA) is renegotiated.

High-impact Canadian labour market data could give CAD a boost this afternoon, given that the forecasts are for a solid uptick in the number of employed during February.

GBP/AUD Nudges Higher; Strong Trade Surplus Fails to Boost the Australian Dollar

The Pound Sterling to Australian Dollar exchange rate was able to rise yesterday, with the Australian Dollar finding little support from January’s impressive trade figures.

Economists had predicted that the trade balance would climb from a deficit of over -AU$1 billion to a surplus of AU$160 million, but it instead posted a surplus of AU$1.05 billion.

Trade War Fears See GBP/NZD Exchange Rate Hold Opening Levels

Appetite for the New Zealand Dollar was muted yesterday, but this merely meant the GBP/NZD exchange rate managed to cling onto opening levels.

Wednesday’s overnight data revealed a -2.5% drop in February’s Truckometer, which could be a sign that business activity is falling.

Trade war fears were continuing to weigh on NZD as well, with markets waiting to see whether other nations will allow the US to impose tariffs unchallenged, or whether they will begin retaliating.

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