Pound (GBP) Jumps on Hopes of Brexit Progress
GBP exchange rates pushed sharply higher across the board yesterday, even after the GfK consumer confidence index held steady at -13.
In spite of consumer confidence remaining firmly within negative territory the mood towards the Pound improved on reports that Brexit discussions between Labour and the Conservative are proving ‘constructive’.
Sterling advanced 0.6% against the Euro and more than 0.8% against the US and Australian Dollars.
Signs of a slowdown in April’s UK manufacturing PMI failed to undermine the Pound’s recent gains, but tomorrow’s Bank of England (BoE) rate decision could cause volatility.
Euro Demand Limited Despite German Inflation Surge
The German consumer price index significantly bettered forecasts during Tuesday’s European session, leaping from 1.3% to 2.0% on the year.
This strong surge in inflationary pressure failed to encourage EUR exchange rates higher, however, with the odds of any European Central Bank (ECB) policy action still limited. Investors also failed to capitalise on the positive nature of the first quarter Eurozone gross domestic product, with political anxiety still taking a toll.
In the absence of any fresh Eurozone data today Euro movement may be limited.
Stronger Consumer Confidence Fails to Benefit US Dollar
A solid uptick in April’s consumer confidence index failed to shore up USD exchange rates yesterday.
Although the index strengthened from 124.1 to 129.2 this was not enough to bolster the appeal of the US Dollar, with the world’s largest economy continuing to show signs of weakness. April’s Chicago PMI offered fresh evidence of a slowing US economy, unexpectedly slipping closer to stagnant territory.
Any dip in tonight’s ISM manufacturing index may add to the bearish mood of USD exchange rates.
Economic Contraction Drags Canadian Dollar Down
February’s domestic gross domestic product data drove the Canadian Dollar lower as growth was found to have contracted on the month.
This disappointing showing left CAD exchange rates on the back foot as confidence in the outlook of the Canadian economy soured once again. With the economy struggling to find any degree of traction the Canadian Dollar was left to trend lower against its rivals.
Unless April’s manufacturing PMI shows increased growth on the month CAD exchange rates look set to remain biased to the downside today.
Weaker Private Sector Credit Growth Limits Australian Dollar
Demand for the Australian Dollar diminished on the back of a weaker-than-expected private sector credit figure, which saw credit growth ease from 4.1% to 3.9% on the year.
AUD exchange rates also came under pressure as a result of the latest Chinese manufacturing PMI. As manufacturing in the world’s second largest economy slowed almost to a state of stagnation in April the appeal of the risk-sensitive Australian Dollar naturally weakened.
However, the Australian Dollar did derive some support from a solid uptick in the AiG Performance of Manufacturing Index for Australia.
New Zealand Dollar Down after Mixed Employment Data
Weak Chinese manufacturing data left the New Zealand Dollar under pressure yesterday as market risk appetite generally diminished. A modest improvement in April’s ANZ activity outlook index failed to shore up NZD exchange rates, with confidence in the underlying health of the New Zealand economy still limited.
NZD exchange rates remained on a downtrend following the release of mixed employment figures. While the unemployment rate declined, this was largely due to a dip in the participation rate, with the level of employment change being lower than forecast.