Pound (GBP) Exchange Rates Retreat on BoE Negative Rate Hints
The Pound (GBP) tumbled yesterday, bringing GBP’s bullish run to an end. This left the Pound to US Dollar exchange rate at the same level as it started the day and the Pound to Euro exchange rate weaker.
Pound exchange rates retreated in response to the Bank of England’s (BoE) latest rate decision.
No policy changes were announced by the BoE this month, but Sterling dived as the bank revealed that its monetary policy committee was briefed how negative interest rates might be introduced.
While this is not a guarantee that such action will be taken, it is the BoE’s strongest hint so far that it is putting serious consideration into implementing negative interest rates.
Meanwhile, the publication of some stronger-than-expected UK retail sales looks unlikely to boost the Pound to US Dollar or GBP/EUR today, amidst reports the UK government is considering new nationwide restrictions as it seeks to slow coronavirus infections.
Euro (EUR) Flat as Eurozone CPI Prints in Line with Estimates
The Euro (EUR) lacked any strong directional bias on Thursday, with the Eurozone’s latest consumer price index confirming that headline inflation contracted 0.2% in August.
Further limiting the upside potential of the single currency was news that weekly coronavirus cases in Europe topped 300,000 last week, prompting WHO European director Dr Hans Kluge to warn that Europe faces a ‘very serious’ situation.
However, the Euro to US Dollar exchange rate recovered in the aftermath of the Federal Reserve’s interest rate decision. The Euro initially dropped against the US Dollar but USD sentiment soon soured as investors expected more Fed action, boosting the Euro to US Dollar exchange rate.
Meanwhile, the BoE rate decision benefited EUR as the Pound to Euro exchange rate weakened slightly, but is holding at €1.09 so far today.
Looking ahead, EUR investors will look to speeches from a couple of European Central Bank (ECB) policymakers for fresh impetus today.
US Dollar (USD) Muted as Jobless Claims Remain Elevated, Pound to US Dollar Holds at $1.29
The US Dollar (USD) was largely rangebound through yesterday’s trading session as the currency struggled for support in light of another disappointing unemployment reading.
US initial jobless claims fell to 860,000 last week, but this fell short of expectations for a fall to 850,000 and indicates that the US economy is still nowhere near firing on all cylinders.
In the spotlight for USD investors today will be Michigan University’s latest US consumer sentiment index, which could offer some support to the US Dollar if sentiment continued to improve this month.
Canadian Dollar (CAD) Slips as Oil Prices Dip Back Below $40
The Canadian Dollar (CAD) was on the defensive yesterday as the commodity-linked ‘Loonie’ was undermined by a fall in oil prices, which saw WTI crude prices drop back below $40 a barrel.
Australian Dollar (AUD) Rangebound on Mixed Market Sentiment
The Australian Dollar (AUD) traded in a narrow range overnight on Thursday, with the risk sensitive currency struggling to find support as fears the global recovery could be stalling amidst a second wave of coronavirus infections buffeted market sentiment.
New Zealand Dollar (NZD) Soars on RBNZ Rate Expectations
The New Zealand Dollar (NZD) rocketed higher in overnight trade in response to comments from (NZ) Finance Minister Grant Robertson, who ruled out any rate changes by the Reserve Bank of New Zealand (RBNZ) until at least March 2021.