Pound Sterling (GBP) Dented by Brexit Risks
The Pound (GBP) was on the defensive on Friday as investors were unnerved by the rising risks of a no-deal Brexit.
Boris Johnson and Jeremy Hunt emerged as the final candidates in the Conservative leadership election, with hardline Brexiteer Johnson widely expected to succeed Theresa May as PM.
Looking to the week ahead, we expect to see political uncertainty continue to influence GBP exchange rates, likely capping any upside in Sterling.
GBP/EUR Exchange Rate Slumps Following Eurozone PMI
The Pound Euro (GBP/EUR) exchange rate fell off sharply at the end of last week, with the pairing dropping over half a cent following the release of the Eurozone’s latest PMI figures.
They revealed that the bloc’s private sector expanded at a faster than expected pace this month, helping to counteract some of the gloom surrounding the Euro since the European Central Bank (ECB) signalled plans to inject fresh stimulus into the Eurozone.
Coming up today we have the release of Germany’s latest Business climate index, which could send the Euro lower if sentiment weakened this month as expected.
GBP/USD Exchange Rate Dips on US Housing Data
The Pound US Dollar (GBP/USD) exchange rate relinquished some ground on Friday, with the ‘Greenback’ able to take advantage of Sterling’s weakness on the back of some upbeat housing data.
After stagnating in April, US existing homes sales were reported to have jumped by 2.5% last month, easily outpacing expectations of a more modest 1.2% expansion.
In focus for USD investors at the start of this week’s session will be the Dallas Manufacturing index, which could provide a lift for the US Dollar this afternoon if factory activity in the region accelerated as expected this month.
GBP/CAD Exchange Rate Steady as Canadian Retail Sales Slump
The Pound Canadian Dollar (GBP/CAD) exchange rate was mostly rangebound throughout Friday’s trading session, with another upswing in oil prices failing to bolster the ‘Loonie’ after Canada reported that domestic retail sales growth was close to stagnating in April.
GBP/AUD Exchange Rate Sinks as RBA’s Lowe Questions Monetary Easing
After edging higher on Friday, the Pound to Australian Dollar (GBP/AUD) exchange rate opens this week’s session on the back foot after Reserve Bank of Australia (RBA) Governor Philip Lowe questioned the effectiveness of further monetary easing.
GBP/NZD Exchange Rate Retreats as Risk Sentiment Improves
Movement in the Pound to New Zealand Dollar (GBP/NZD) exchange rate has largely mirrored GBP/AUD at the start of this week’s session, with NZD strengthening after Lowe’s comments helped improve risk appetite.
Looking ahead, we may see the ‘Kiwi’ tick higher later this evening as economists forecast New Zealand’s trade surplus will have expanded in May.
Data Releases
09:00 EUR German Business Climate (Jun)
11:00 GBP CBI Distributive Trades (Jun)
15:30 USD Dallas Manufacturing Index (Jun)
23:45 NZD Trade Balance (May)