Pound (GBP) Fluctuates as Brexit Realities Sink In
The Pound (GBP) came crashing back to earth at the start of the week as markets reflected on last week’s buying frenzy.
The realities of Brexit talks have started to sink in, with both the UK and EU indicating a ‘significant’ amount of work still needs to be done in order to secure a deal.
However, Sterling eventually bounced back in overnight trade amidst reports of optimism from EU officials.
In the absence of any notable Brexit headlines this morning, we may see domestic data exert fresh pressure on Sterling. Could a slowdown in wage growth drag on GBP exchange rates?
GBP/EUR Exchange Rate Retreats as Eurozone Industrial Production Rebounds
The Pound Euro (GBP/EUR) exchange rate dropped back from a five-month low on Monday with positive Eurozone data helping the single currency press its advantage against Sterling.
Eurozone industrial production beat expectations in August, rebounding from -0.4% to 0.4%, suggesting the bloc’s economic slowdown may be less severe than originally feared.
Despite this, economists are still expected to remain broadly pessimistic in their outlook for the Eurozone, with a gloomy ZEW survey this monring potentially placing pressure on the Euro.
GBP/USD Exchange Rate Softened by Positive US-China Trade Headlines
The Pound to US Dollar (GBP/USD) exchange rate fell as much as a cent at the start of the week following positive progress in US-China trade talks.
However, the ‘Greenback’ failed to consolidate at its best levels when Beijing revealed it wants more talks before signing off on a ‘phase 1’ deal.
The Empire State manufacturing index could exert fresh pressure on the US Dollar today as economists forecast factory growth in the North East continuing to slow this month.
GBP/CAD Exchange Rate Losses Capped by Oil Rout
The Pound to Canadian Dollar (GBP/CAD) exchange rate edged lower on Monday, but sidestepped major losses when Brent crude tumbled by 3%, forcing the oil-sensitive ‘Loonie’ off its best levels.
GBP/AUD Exchange Rate Climbs on Dovish RBA Minutes
The Pound to Australian Dollar (GBP/AUD) exchange rate struck a new five-month high in overnight trade on Monday when the Reserve Bank of Australia’s (RBA) October policy meeting minutes confirmed the bank’s easing bias, placing the ‘Aussie’ under pressure.
GBP/NZD Exchange Rate Buoyed by Trade Uncertainty
The Pound to New Zealand Dollar (GBP/NZD) exchange rate also struck higher overnight, with the risk-sensitive ‘Kiwi’ retreating on renewed US-China trade uncertainty.
Looking ahead, we may see NZD exchange rates buoyed later this evening if domestic inflation prints robustly in the third quarter.