Pound (GBP) Exchange Rates Shrug off Stagnant UK Growth
A surprise stagnation in the monthly UK gross domestic product figure failed to knock the Pound off its positive footing yesterday. While the monthly growth rate fell short of forecasts, raising the risk of a disappointing fourth quarter GDP figure, GBP exchange rates remained on an uptrend.
Sterling lingered in the region of recent highs amid expectations that this week’s election could end with a Conservative majority.
However, with the UK taking to the polls tomorrow, the potential for a political upset could cap Pound gains.
Improved ZEW Economic Sentiment Fuels Euro (EUR) Uptrend
EUR exchange rates pushed higher across the board yesterday as the latest ZEW economic sentiment survey delivered unexpectedly positive results.
After November’s negative reading, the German sentiment index clocked in at a solid 10.7, suggesting a greater level of optimism within the Eurozone’s powerhouse economy. While the current conditions index remained in negative territory this was not enough to prevent the euro pushing higher.
The Euro may struggle to hold on to its gains however as anticipation mounts ahead of tomorrow’s European Central Bank (ECB) interest rate decision.
US Dollar (USD) Looks to FOMC Interest Rate Decision for Guidance
November’s NFIB small business optimism index picked up from 102.4 to 104.7 on the month but the US Dollar struggled to gain any significant ground yesterday. Even with businesses showing increased signs of confidence as the end of the year approaches markets still see reason to worry over the outlook of the world’s largest economy.
While today’s US consumer price index could boost USD if it shows the uptick in inflationary pressure forecast by economists, movement may be limited ahead of the Federal Open Market Committee (FOMC) rate announcement.
Any hints from the Fed that rates could be cut in 2020 would be USD-negative.
Canadian Dollar (CAD) Under Pressure
Rising oil prices failed to lift the Canadian Dollar yesterday as worries over the health of the global trade outlook and recent signs of Canadian economic weakness lingered.
With the third quarter capacity utilisation index expected to show a deterioration the Canadian Dollar could fall further out of favour today, with weaker production signals raising the risk of a soft fourth quarter.
Falling Confidence Undermines Australian Dollar (AUD) Exchange Rates
November’s NAB business confidence index slipped from 2 to 0 as forecast, keeping AUD exchange rates on the back foot despite reports that the US could delay its planned December tariffs on Chinese products.
A decline in Westpac’s consumer confidence index applied further pressure.
New Zealand Dollar (NZD) Weakened by Slump in Retail Spending
Demand for the New Zealand Dollar (NZD) eased during the Australasian session as domestic retail card spending figures came in below forecasts. Card spending slumped -0.6% on the month rather than coming in at 0.4% as expected.