GBP/AUD Exchange Rate Rises on BoE’s Carney Compares UK Economy to ‘Still Fluttering’ Coalmine Canary

Pound Australian Dollar (GBP/AUD) Exchange Rate Buoyed as Carney Likens UK Economy to ‘Still Fluttering’ Canary

UPDATE: The Pound Australian Dollar (GBP/AUD) exchange rate rose over the afternoon after Bank of England (BoE) Governor, Mark Carney’s speech.

The pairing is currently trading at an inter-bank rate of AU$1.8174.

Carney said that while global economic growth will stabilise at a newer and slower pace, current risks such as trade tensions, China’s slowdown and protectionism could threaten this ‘delicate equilibrium’.

The speech concluded with Carney stating:

‘Brexit is the first test of a new global order and could prove the acid test of whether a way can be found to broaden the benefits of openness while enhancing democratic accountability. Brexit can lead to a new form of international cooperation and cross-border commerce built on a better balance of local and supranational authorities. In these respects, Brexit could affect both the short and long-term global outlooks.’

His optimism likely buoyed Sterling, as when questioned if the UK is ‘the canary in the coal mine for the new world order’, Carney joked:

‘The bird may be towards the bottom of the cage, but it’s still fluttering.’

Pound to Euro Exchange Rate Avoids Worst Levels as Euro Lacks Drive

UPDATE: Investors were hesitant to keep selling the Pound Sterling to Euro (GBP/EUR) exchange rate on Tuesday afternoon, as the Euro (EUR) remained unappealing.

The Pound (GBP) was unappealing on this week’s UK data as well, but the currency steadied as investors anticipated tomorrow’s upcoming UK inflation rate report.

If UK inflation beats expectations it could offset concerns that the Bank of England (BoE) could be pressured into cutting UK interest rates.

Weaker inflation would have the opposite effect though, causing BoE interest rate cut bets to rise and the Pound to weaken.

Pound to Euro Exchange Rate Unable to Advance amid Lack of Pound Support

UPDATE: The Pound Sterling to Euro (GBP/EUR) exchange rate slipped to a new weekly low in the early afternoon, but its losses were still limited.

The Pound (GBP) was unable to recover against the Euro (EUR), as market demand for safe havens lightened.

As the Euro’s biggest rival is the US Dollar (USD), a favoured safe haven currency, the Euro has been able to firm.

Pound to Euro (GBP/EUR) Exchange Rate Steady Following Monday’s UK GDP-Inspired Slip

On Monday, investors sold the Pound (GBP) as the latest UK economic data indicated that the domestic economic outlook was even worse than expected.

As a result, the Pound Sterling to Euro (GBP/EUR) exchange rate slipped, but its losses were limited due to a lack of Euro (EUR) support.

GBP/EUR has only shed around a third of a cent since it opened at the interbank level of around €1.14 this week. GBP/EUR has been moving in a tight region for most of the month so far, with both the Pound and Euro too unappealing to advance.

Britain’s economic outlook has worsened this week, and if upcoming inflation data disappoints too it could cause Bank of England (BoE) interest rate cut bets.

The Euro, on the other hand, is unappealing amid a recession in Italy and fears of a potential recession in Germany.

Pound (GBP) Exchange Rates Unappealing amid Lack of Brexit Developments

Yesterday’s British data knocked Sterling (GBP), as it indicated that Britain’s economy was performing even worse than expected as Brexit uncertainties throttled business activity.

Manufacturing and industrial production stats from December all printed surprisingly deep contractions, while Q4 business investment projections also shrank back.

Not only that, but the latest Q4 and December Gross Domestic Product (GDP) growth rate figures fell short in most prints and December’s monthly figure came in with a concerning contraction of -0.4%.

With British growth in retreat, investors don’t expect business activity will improve until there is some kind of major development and clarity over how exactly Brexit will unfold.

As investors await further developments from the UK government’s negotiations with the EU and opposition parties, the Pound’s strength is volatile and limited.

Euro (EUR) Exchange Rates Fail to Capitalise on Pound Weakness amid Economic Jitters

The Euro (EUR) edged higher versus the weak Pound (GBP) yesterday, but its gains were limited by a lack of support for the shared currency.

Over recent weeks, investors have sold the Euro on building speculation that Germany’s economy is heading towards a recession.

The Eurozone’s biggest economy has been performing much slower than expected according to the latest ecostats. Analysts increasingly expect Germany’s slowdown will last longer than expected, with many economists predicting the nation could soon see a recession.

These figures have caused broad Euro losses and there has been little reason for investors to buy the shared currency again, aside from weakness in rivals.

Pound to Euro (GBP/EUR) Exchange Rate Investors Anticipate Data and Brexit News

The Pound to Euro (GBP/EUR) exchange rate is likely to see further steady movement unless there are some surprising figures in domestic data or Brexit developments.

Wednesday will see the publication of some more key prints, including UK inflation rate stats for January and the Eurozone’s December industrial production figures.

UK inflation could be influential if it falls short of expectations, as this would worsen concerns about domestic price pressures and lead to Bank of England (BoE) interest rate cut bets. Sterling (GBP) may strengthen if the inflation is higher than expected though.

Euro (EUR) investors are more likely to anticipate key data due for publication on Thursday, including German and Eurozone growth projections for Q4.

If the German growth data comes in notably lower than expected, German recession fears could worsen and GBP/EUR could be in for gains.

Brexit developments will remain influential of course. If the UK government is able to gain any ground in negotiations with the EU or opposition parties, the Pound to Euro (GBP/EUR) exchange rate would become more appealing.

Josh Ferry Woodard

After leaving university in 2011 Josh briefly worked as a currency analyst in the South West of Cornwall. Josh continued monitoring the currency markets and publishing exchange rate analysis after moving to London in 2012, with a particular focus on the impact of economic and political stimuli on forex. Josh was a regular contributor to The Telegraph’s weekly currency feature for several years.

Contact Josh Ferry Woodard


Related