Dovish BoE could Prompt Fresh Sell-Off in Pound Sterling (GBP)
After collapsing through the first half of the session, the Pound (GBP) finally found a stable footing yesterday in the absence of any fresh Brexit headlines.
However the Sterling sell-off looks poised to resume later this afternoon, as the Bank of England (BoE) is widely expected to strike a dovish tone following its latest policy meeting.
Also potentially casting the Pound lower today will be the UK’s manufacturing PMI, which is expected to show that growth in the domestic factory sector slumped in July.
GBP/EUR Exchange Rate Lifted by Slowdown in Eurozone GDP
The Pound to Euro (GBP/EUR) exchange rate ticked higher on Wednesday as the single currency was undermined by the Eurozone’s latest GDP figures as growth slowed from 0.4% to 0.2% in the second quarter.
Adding further pressure were the accompanying CPI figures as inflation in the Eurozone slowed to a 17-month low, likely putting more pressure on the European Central Bank (ECB) to lower interest rates when they meet in September.
Today’s Eurozone PMI release is expected to confirm that growth in the bloc’s manufacturing sector suffered its worst contraction since 2012 last month.
GBP/USD Exchange Rate Strikes Fresh 28-Month Low Post FOMC
The Pound to US Dollar (GBP/USD) exchange rate fell sharply yesterday, refreshing the 28-month low struck earlier in the week as markets reacted to the Federal Reserve’s latest policy decision.
While the Federal Open Market Committee (FOMC) voted to cut rates as expected, the decision was not unanimous, which along with the bank’s lack of commitment towards future rate cuts helped to light a fire under the ‘Greenback’.
Looking ahead, a robust ISM manufacturing PMI could lend some support to the US Dollar later this afternoon if it signals that the US economy has maintained its momentum into the third quarter.
GBP/CAD Exchange Rate Muted as Canadian GDP Impresses
The Pound to Canadian Dollar (GBP/CAD) exchange rate traded in a narrow range yesterday as the broad pick-up in Sterling was offset by the publication of Canada’s GDP figures. The growth data revealed that Canada’s economy expanded at a faster pace than expected in May.
GBP/AUD Exchange Rate Slips as Chinese Manufacturing PMI Improves
After accelerating through the European session, the Pound Australian Dollar (GBP/AUD) exchange rate fell back again overnight on Wednesday as the appeal of the ‘Aussie’ was bolstered by the release of some stronger-than-expected Chinese manufacturing data.
Later tonight we have the publication of Australia’s latest retail sales figures, which could help to boost AUD exchange rates if sales growth accelerated in June as forecast.
GBP/NZD Exchange Rate Retreats as Market Risk Appetite Improves
The recovery in the Pound to New Zealand Dollar (GBP/NZD) exchange rate was also cut short last night as market risk appetite was lifted by the upbeat Chinese data.