Threat of 'Victorian-Era' Lull in UK Productivity Dampens Pound to Australian Dollar (GBP/AUD) and US Dollar (GBP/USD) Forecasts

Pound Sterling to Australian Dollar (GBP/AUD) and US Dollar (GBP/USD) Exchange Rates Tumble as BoE Deputy Warns UK Economy is Past its Peak

Both the Pound Sterling to Australian Dollar (GBP/AUD) and Pound Sterling to US Dollar (GBP/USD) exchange rates declined on Wednesday as the Bank of England’s (BoE) Deputy Governor Ben Broadbent warned that the UK economy may be past its peak.

Describing the UK economy as entering a ‘menopausal’ era, a term he was later forced to apologise for, Broadbent suggested the UK may be experiencing a lull between the digital era and the next big technological breakthrough, akin to the Victorian-era transition from steam to electricity.

Looking ahead the GBP exchange rate may mount a recovery later today if the UK’s recent pay figures lead to a more optimistic outlook from the BoE’s Chief Economist, Andy Haldane.

GBP/EUR Exchange Rate Rises on Eurozone Inflation Figures

The Pound Euro (GBP/EUR) exchange rate appeared to be the only major Sterling pairing to advance on Wednesday, with the single currency coming under pressure as the Eurozone’s latest CPI figures confirmed inflation slowed in April.

Markets were particularly concerned by the sharp drop in the core CPI figures as it suggests headline inflation is largely being propped up by the recent surge in oil prices, something which will not be lost on the European Central Bank (ECB) as it discusses its exit from quantitative easing.

Rising US Hike Expectations to Deliver Further GBP/USD Losses?

After initially sliding on Wednesday, the Pound US Dollar (GBP/USD) exchange rate appeared to find its footing again by the afternoon as the US Dollar’s rally began to run out of steam once again.

However, this respite in the GBP/USD exchange rate may prove to be only temporary, with the US Dollar likely to press higher again late on Thursday if a speech by the Federal Reserve’s Robert Kaplan helps bolster Fed rate hike expectations.

GBP/CAD Exchange Rate Slumps as Oil Nears $80 a Barrel

The Pound Canadian Dollar (GBP/CAD) exchange rate fell back by over half a cent yesterday as markets began to contemplate the possibility of oil prices crossing the $80 threshold, with the ‘Loonie’ (CAD) also being lifted by some stronger-than-expected domestic manufacturing sales figures.

Pound Sterling to Australian Dollar (GBP/AUD) Exchange Rate Slides as Australian Employment Grows

The Pound Australian Dollar (GBP/AUD) exchange rate fluctuated overnight, with Sterling’s attempts to rally being thwarted by the release of Australia’s latest jobs report.

While unemployment was revealed to have ticked up last month, it appears markets were willing to overlook this as they welcomed a rebound in employment growth in April following two months of declines.

GBP/NZD Exchange Rate Plummets as Markets Go Risk-On

The Pound to New Zealand Dollar (GBP/NZD) exchange rate beat a hasty retreat during yesterday’s session, with the broad-based weakness in Sterling and an uptick in market risk appetite helping the ‘Kiwi’ (NZD) to appreciate.

Adam Solomon

Adam joined the team at TorFX soon after graduating from University in 2005 with a degree in Journalism. Since then Adam has advanced to become both Head of Trading and Head of Treasury. His keen interest in the currency market and knowledge of what drives exchange rates makes him perfectly positioned to produce regular market updates focused on the movements of the major currencies.

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