Brexit Optimism Strengthens the Pound (GBP)
The Pound (GBP) maintained its upward trajectory on Wednesday as rising hopes the UK will avoid a no-deal Brexit helped Sterling regain its composure.
Investors welcomed the passing of a bill to delay Brexit and also appeared relieved that MP’s rejected Boris Johnson’s call for a general election.
However, also trimming these gains was the news that the UK’s dominant services sector was close to stagnation in August, prompting warning the country ‘is at risk of slipping into recession’.
The focus will remain on UK politics today, with Johnson expected to make a public speech later this morning.
GBP/EUR Exchange Rate Accelerates, Lagarde Signals Support for Highly Accommodative Policy
The Pound to Euro (GBP/EUR) exchange rate trended higher through Wednesday’s session, with EUR investors focused on a speech by incoming European Central Bank (ECB) President Christine Lagarde.
Speaking to the European Parliament, Lagarde indicated she would continue to tread the same path as her as incumbent President Mario Draghi, echoing his stance that ‘highly accommodative policy is warranted for a prolonged period’.
Looking to today’s session, the Euro may struggle to win over investors as data revealed German factory orders contracted more than expected in July, likely stoking fears the country will face a recession this year.
US Recession Fears Extend Recovery in GBP/USD Exchange Rate
Growing concerns that the US economy is drifting towards a recession helped the Pound US Dollar (GBP/USD) exchange rate extend its gains for a second consecutive session yesterday.
This comes on the back of the ISM manufacturing PMI released on Tuesday, with USD bulls retreating in response to a shock contraction in US factory growth in August.
Coming up this afternoon the publication of the ISM non-manufacturing PMI could heap more pressure on the US Dollar if the service sector suffered a similar slowdown last month.
GBP/CAD Exchange Rate Gains Capped by BoC Rate Decision
As was widely expected the Bank of Canada (BoC) voted to keep interest rates on hold again this month, limiting the upside in the Pound to Canadian Dollar (GBP/CAD) exchange rate yesterday.
In its policy statement the BoC claimed the current ‘degree of monetary policy status remains appropriate’ while maintaining its neutral bias in its forward guidance.
Robust Australian Trade Data Undermines the GBP/AUD Exchange Rate
The Pound to Australian Dollar (GBP/AUD) exchange rate retreated overnight on Wednesday as the ‘Aussie’ rallied on the back of robust domestic trade figures.
GBP/NZD Exchange Rate Relinquishes Ground on US-China Trade Optimism
Overnight the US and China agreed to restart face-to-face trade talks, resulting in the Pound to New Zealand Dollar (GBP/NZD) exchange rate retracing some of its gains as the ‘Kiwi’ was boosted by rising risk sentiment.