Pound (GBP) Buoyed against Euro and US Dollar by BoE Comments
The Pound (GBP) found its feet again on Wednesday, making solid gains against the Euro and US Dollar.
Comments from Bank of England (BoE) chief economist Andy Haldane pushed the Pound to Euro exchange rate higher, as he poured more cold water on speculation the BoE could cut interest rates below zero in the immediate future.
Also offering some support to Sterling was a modest revision in the UK’s final GDP reading for the second quarter, which narrowed the contraction from 20.4% to 19.8%.
Looking ahead, any additional upside in GBP exchange rates will be tied to Brexit developments, as the UK and EU continue trade negotiations today amid optimism the two sides are close to finalising a deal.
However, the Pound to Euro exchange rate is dropping so far this morning as Brexit reports emerge that the UK and EU remain split, particularly on the issue of state aid.
These reports have raised concerns of continued deadlock in negotiations and a potential no deal, which has caused the Pound to US Dollar exchange rate to fall back to $1.28.
Euro (EUR) Undermined by ECB President Lagarde
The Euro (EUR) struck lower during yesterday’s session, weakening against GBP and USD as pressure came in the wake of comments from European Central Bank (ECB) President Christine Lagarde.
Lagarde, who issued a warning over the Eurozone’s economic recovery earlier in the week, maintained her dovish tone in a speech hosted by the Institute for Monetary and Financial Stability, in which she said that weak inflation poses fundamental challenges to the ECB.
Turning to today’s session, the Euro could remain on the defensive as the Eurozone’s latest jobs figures are expected to report another increase in unemployment in August.
However, the Euro is making gains against the Pound at the start of the session on the split in Brexit trade talks, but the EUR/USD exchange rate remains flat.
US Dollar (USD) Stabilises in Wake of Election Debate
The US Dollar (USD) traded in a narrow range through yesterday’s European session, as the currency relinquished its initial gains following a fierce clash between Biden and Trump in the first US election debate.
This pullback in US Dollar exchange rates came in spite of the latest ADP employment report revealing a stronger-than-expected rise in US payroll numbers in September.
In the spotlight today will be the latest ISM manufacturing PMI release. Will the US Dollar strengthen today if the figures report US factory activity continued to improve this month?
Canadian Dollar (CAD) Strengthens on Robust GDP Release
The Canadian Dollar (CAD) ticked higher on Wednesday, with another healthy expansion in Canadian economic growth in July helping the ‘Loonie’ to offset a slump in oil prices.
Australian Dollar (AUD) Buoyed by US Stimulus Hopes
The Australian Dollar (AUD) struck higher overnight on Wednesday, with the risk-sensitive ‘Aussie’ strengthening on the back of improving market optimism amidst hopes a new US stimulus package could soon be approved.
New Zealand Dollar (NZD) Strengthens in Risk-On Trade
The New Zealand Dollar (NZD) also ticked higher in overnight trade, with an improvement in market sentiment helping to spur the risk-sensitive ‘Kiwi’ higher.