Anticipation of Stronger UK Economic Forecasts Boosts Pound Sterling Exchange Rates ahead of Philip Hammond’s Spring Statement Speech

Pound Sterling Exchange Rates Advance as Markets Eye Spring Budget Statement

Hopes that today’s Spring Statement from Chancellor of the Exchequer Philip Hammond would contain a more upbeat outlook upon the UK economy boosted Pound Sterling exchange rates yesterday.

However, Hammond’s speech is expected to last no more than 20 minutes and will contain no significant changes to fiscal policy, such as tax cuts.

Solid Gains for GBP/EUR Exchange Rate after Downbeat Coeure Comments

The Euro was left on soft form yesterday by comments from European Central Bank (ECB) policymaker Benoit Coeure.

The GBP/EUR exchange rate was able to advance after Coeure echoed the cautious tone of last week’s Monetary Policy Statement by stating that he sees interest rates remaining at ‘very low levels’ in the short-term.

GBP/USD Makes Strong Gains as Markets Worry Recent Payrolls Data may not Convince Fed to Hike Past March

Pound Sterling was able to make strong gains versus the US Dollar yesterday as the currency markets remained unconvinced by Friday’s strong non-farm payrolls report.

While the report revealed a huge 313,000 people had entered the workforce in February, it also showed a worse-than-expected rate of growth for wages.

Markets were fearing that weak pay growth would give the Federal Reserve cause to hold off on further adjustments to monetary policy over the medium term, even if they do deliver a hike in March.

The GBP/USD exchange rate could come under pressure today if the US February consumer price index figures show a slight uptick in overall inflation to 2.2% as predicted.

GBP/CAD Climbs as Markets Await Today’s Speech from BOC Governor Poloz

With Bank of Canada (BOC) Governor Stephen Poloz due to speak on the topic of the labour market today, markets had little reason to buy the Canadian Dollar yesterday.

Employment is one of the key measures used by central banks when setting interest rates, so Poloz could easily say something in a speech that either sends CAD racing higher or plummeting.

Additionally markets were worried Canada may be pressured into agreeing poor terms during renegotiations of the North American Free Trade Agreement (NAFTA), as Donald Trump said he will not implement steel and aluminium tariffs if the US gets a fair deal.

Softness in the Euro and US Dollar yesterday was benefiting the Australian Dollar, meaning that the GBP/AUD exchange rate was only able to crawl slightly above opening levels.

Data showing a slight shrinking of credit card purchases and balances during January held the Australian Dollar back to a degree, as this could be a signal that consumers are feeling less confident about the economy and so are reining in their spending.

The Westpac consumer confidence index for March is set for release tonight, which could keep the Australian Dollar under pressure throughout the day.

Lack of New Zealand Economic Data allows GBP/NZD Exchange Rate to Nudge Higher

With a lack of domestic data on the calendar and no overwhelming weakness in the safe haven assets, the New Zealand Dollar was left on rather muted form yesterday. This allowed the GBP/NZD exchange rate to edge higher.

The New Zealand current account balance and current account to GDP ratio for the fourth-quarter of 2017 are due out this evening.

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