GBP/EUR: Fear of BoE Interest Rate Freeze on UK Inflation Data Drags Exchange Rate Down
UPDATED: Sterling (GBP) has fallen to a four-month low against the Euro (EUR) today, in the wake of unsettling inflation rate data.
This has left the GBP/EUR exchange rate at a level of €1.12 on the interbank rate, during the worst run of trading since March 2017.
June’s inflation rate figures have reprinted at 2.4% on the year and slowed to 0% movement on the month, missing forecasts for acceleration.
There are plenty of economists who think that an August Bank of England (BoE) interest rate hike is still on, but GBP traders have still been rattled as the news risks a rate freeze.
Pound Sterling to Euro (GBP/EUR) Exchange Rate Edges Lower as May Weakened by Customs Amendments
After holding steady for much of the session, the Pound Sterling to Euro (GBP/EUR) exchange rate stumbled yesterday afternoon as Theresa May bowed to pressure from within her party to accept changes to her customs bill.
Not only did this appear to water down the government’s soft Brexit approach, but it was also seen as undermining the PM’s position, potentially leaving her open to a leadership contest in the near future.
Today will see the publication of the UK’s latest employment report, with traders bracing for another possible fall in the Pound if wage growth slows as forecast.
GBP/EUR Exchange Rate Falls Despite dip in Eurozone Trade Surplus
The Pound to Euro (GBP/EUR) exchange rate fell back on Monday, closing the session down around 0.2%, with the publication of the Eurozone’s latest trade balance unable to lift sentiment.
Eurostat figures revealed a surprise dip in the Eurozone trade surplus in May as it fell from €16.7bn to €16.5bn, although crucially it still rose against the US, something which will do little to alleviate Trump’s ire at the ‘unfair’ trade relationship.
Meanwhile a lull in data on Tuesday means EUR investors will now turn their attention to Wednesday, with the Euro potentially strengthening if inflation is confirmed to have risen in June.
GBP/USD Exchange Rate Firms as Profit Taking Pressures the US Dollar
The Pound US Dollar (GBP/USD) exchange rate briefly advanced yesterday as some robust US retail sales figures failed to prevent a broad-based fall in USD.
This drop in the US Dollar appeared to be largely attributed to a bout of profit taking, after the currency saw its largest weekly gain in a month last week.
The Federal Reserve will be back in focus today, with markets paying close attention to Fed Chair Jerome Powell’s testimony before congress today, as they look to gauge whether the recent surge in trade tensions could influence the path of interest rates this year.
GBP/CAD Exchange Rate Stabilises as Oil Prices Tumble
The Pound Canadian Dollar (GBP/CAD) exchange rate closed Monday’s session only slightly down as a sharp drop in oil prices prevented the ‘Loonie’ from fully exploiting the weakness in GBP.
Looking ahead, a possible rebound in Canadian manufacturing sales growth could help lift CAD exchange rates today.
GBP/AUD Exchange Rate Volatile in Wake of RBA Minutes
The Pound Australian Dollar (GBP/AUD) exchange rate traded higher through Monday’s session before fluctuating overnight as the minutes from the most recent Reserve Bank of Australia (RBA) policy meeting revealed a mixed outlook from policymakers.
GBP/NZD Exchange Rate Plunges as ‘Kiwi’ Bolstered by RBNZ Inflation Estimate
The Pound New Zealand Dollar (GBP/NZD) exchange rate moved sharply lower overnight on Monday, with the ‘Kiwi’ roaring in overnight trade as the Reserve Bank of New Zealand (RBNZ) revised its underlying inflation expectations to 1.7%, its highest levels since 2011.
The ‘Kiwi’ may come under pressure again today however, with another sharp slump in prices at the global dairy auction this afternoon likely to drag on sentiment.