UK Political Turmoil Drives Pound (GBP) Volatility
The Pound (GBP) got off to a poor start yesterday, falling sharply against its peers amidst speculation the UK could soon face a snap election.
Sterling then rallied through the second half of the session, with no-deal Brexit fears easing as Boris Johnson lost his majority in parliament, while the opposition successfully seized control of the agenda.
This allows MPs to bring forth a bill requesting a Brexit delay, a vote on which will take place later this evening.
The publication of the UK’s services PMI could provide GBP investors with a brief distraction from politics this morning, although with growth in the sector expected to remain weak in August, it may result in more pressure on Sterling.
ECB Rate Cut Expectations Keep EUR Exchange Rates Muted
Following an initial wobble, the Pound to Euro (GBP/EUR) exchange rate traded in a narrow range throughout Tuesday’s European session.
EUR exchange rates were generally subdued yesterday on reports that the European Central Bank (ECB) will cut rates this month and pledge to keep rates lower for longer.
Coming up this morning the latest Eurozone retail sales figures may undermine the single currency if sales growth contracted in July as forecast.
Shock Contraction in US Manufacturing Output Weakens USD
The Pound US Dollar (GBP/USD) exchange rate initially tumbled on Tuesday, briefly touching a three-year low and threatening to close at its worst levels since 1985.
However Sterling was able to claw back ground following the publication of the latest ISM manufacturing PMI as it revealed a shock contraction in US factory growth in August.
A number of Federal Reserve policy makers are scheduled to speak later this evening, potentially influencing USD exchange rates.
Rout in Oil Prices Limits Downside in GBP/CAD Exchange Rate
A sharp drop in crude prices help to reverse some early losses in the Pound to Canadian Dollar (GBP/CAD) exchange rate on Wednesday.
Looking ahead, movement in the Canadian Dollar will be dependent on the tone struck by the Bank of Canada (BoC) in its forward guidance, with a hawkish outlook likely to boost CAD exchange rates.
GBP/AUD Exchange Rate Muted on Robust Australian GDP
The Pound to Australian Dollar (GBP/AUD) exchange rate remained in a narrow range overnight on Tuesday as a strong Australian GDP reading in the second quarter bolstered the appeal of the ‘Aussie’.
GBP/NZD Exchange Rate Rallies as Dairy Prices Slide
The Pound to New Zealand Dollar (GBP/NZD) exchange rate stabilised late on Tuesday, with the ‘Kiwi’ unable to consolidate its gains following another contraction in dairy prices.