Pound Sterling (GBP) Dented by Brexit Jitters
After just being able to hold its ground throughout the week, the Pound (GBP) moved sharply lower against the majority of its peers on Friday.
There didn’t appear to be any particular trigger for this sell-off, instead it appeared to be a consequence of building political and Brexit uncertainty throughout the week’s session.
Coming up this morning we have the publication of the first of the UK’s PMI readings for May, with the Pound likely to extend its recent losses if growth in the manufacturing sector is shown to have slowed last month as expected.
GBP/EUR Exchange Rate Losses Trimmed by Weak German Inflation
The Pound Euro (GBP/EUR) exchange rate fell as much as half a cent at the end of last week, before the pairing managed to pull itself away from a four-month low following the release of Germany’s CPI figures.
Inflation in Germany was shown to have slumped from 2% to 1.4% in May, falling below the more modest slide to 1.6% that had been forecast and raising concerns that Eurozone inflation will also disappoint this week.
Looking to the week ahead, the focus for EUR investors is likely to be on the European Central Bank’s (ECB) policy meeting, with movement in the single currency ahead of the bank’s rate decision on Thursday likely to be limited.
GBP/USD Exchange Rate Slides as US Announces Mexico Tariffs
The Pound US Dollar (GBP/USD) exchange rate slumped again on Friday, with the pairing closing in on its worst level since early January after the US shocked markets by imposing tariffs on all exports from Mexico.
The move unsurprisingly prompted a risk-off response from investors, buoying demand for the safe-haven ‘Greenback’.
However potentially limiting any upside in the US Dollar at the start of this week will be the publication of the ISM manufacturing PMI, with economists forecasting activity in US factories will have remained subdued in May.
GBP/CAD Exchange Rate Steady as Canadian Growth Misses
The Pound Canadian Dollar (GBP/CAD) exchange rate was able to hold in a narrow range at the end of last week’s session, with the ‘Loonie’ unable to take advantage of the weakness in Sterling after Canadian GDP came in lower than expected in the first quarter.
GBP/AUD Exchange Rate Slides on Fed Rate Cut Speculation
The Pound Australian Dollar (GBP/AUD) exchange rate continued to trend lower on Friday, with the ‘Aussie’ finding support on growing speculation that the US Federal Reserve may cut interest rates this year.
However in the meantime, markets will be bracing for a potential rate cut from the Reserve Bank of Australia (RBA) even sooner, with economists forecasting that the bank could slash rates at the conclusion of its June policy meeting later tonight.
GBP/NZD Exchange Rate Sinks on US Rate Cut Bets
The Pound to New Zealand Dollar (GBP/NZD) exchange rate also slipped at the end of last week as the prospect of lower US interest rates helped to buoy the ‘Kiwi’.