Pound (GBP) Soars on Stronger BoE Outlook
The Pound (GBP) struggled to find direction yesterday amid ongoing concerns over a second wave of coronavirus infections and lingering Brexit jitters.
GBP investors were also reluctant to place any aggressive bets on Sterling as they awaited the Bank of England’s (BoE) rate decision.
The BoE’s decision ultimately proved to be the biggest driver of exchange rates today, with Sterling surging at the start of today’s session as the bank left policy untouched and revised its growth forecasts notably higher.
Also of note for GBP investors today will be the UK’s latest construction PMI, with another robust expansion in construction activity last month potentially propelling GBP exchange rates even higher.
Euro Exchange Rates Today – EUR Firms on Positive Data
The Euro (EUR) traded positively on Wednesday as EUR investors welcomed the Eurozone’s latest economic releases.
With a robust print in July’s final services PMI and a surprise expansion in annualised retail sales in June thanks to a revision in May’s figures, traders appeared increasingly optimistic at the chances for a V-shaped recovery in the Eurozone this year.
Turning to today’s session it’s likely we could see the Euro extend this upward momentum in light of data showing a dramatic surge in German factory orders in June.
US Dollar (USD) Falls on Big ADP Report Miss
The US Dollar (USD) fell sharply during yesterday’s trading session after the latest ADP employment report printed well below expectations.
Economists had forecast employment growth would rise 1,500,000 in July, leaving USD investors severely disappointed with a print of just 167,000 and pessimistic for Friday’s highly influential payroll report.
While Wednesday’s ISM non-manufacturing PMI revealed a larger-than-expected expansion in the US service sector in July it failed to trigger a recovery in light of the depressing jobs numbers.
With US employment in the spotlight, all eyes will be on US lawmakers today on hopes the Republicans and Democrats will finally be able to reach an agreement on the next round of US fiscal stimulus.
Oil Rally Drives CAD Exchange Rates Today
The Canadian Dollar (CAD) trended higher on Wednesday as the appeal of the commodity-linked ‘Loonie’ was bolstered by a sharp uptick in oil prices.
This came amid broad USD weakness as well as a sharper-than-expected drop in US crude inventories.
Australian Dollar (AUD) Undermined by PM’s Comments
The Australian Dollar (AUD) trended lower overnight on Wednesday in response to some dovish comments from Prime Minister Scott Morrison.
The PM warned that national unemployment is expected to rise to 10% and that new lockdown measures in Victoria could cost the economy as much as AU$9bn.
New Zealand Dollar (NZD) Dips in Skittish Trade
The New Zealand Dollar (NZD) also trended lower overnight as uncertainty over US fiscal stimulus weighed on market sentiment and limited the appeal of the risk-sensitive ‘Kiwi’.