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Bank of England’s (BoE) Confidence in UK Bank Resilience Bolsters Pound

Pound News: Bank of England (BoE) Indicates UK Finance Sector would Survive No-Deal Brexit

After being dragged lower by no-deal Brexit fears and rising Bank of England (BoE) interest rate cut bets over the past week, the Pound was able to creep higher on Wednesday.

The British currency found some fresh support as the Bank of England indicated that it believed Britain’s banks and finance sector would be able to survive both a no-deal Brexit and a potential global trade war.

No notable UK data will be published today, so any fresh comments from Bank of England (BoE) officials that influence BoE speculation or any surprising political news could drive the Pound instead.

Euro News: EUR Movement Mixed on ECB Speculation

The Pound recovered from its post-January lows against the Euro yesterday, and yesterday’s German and French inflation rate stats did little to support it.

This was because despite German inflation coming in slightly better than expected in some prints, concerns still persist about Eurozone economic activity. Analysts remain anxious that some signs of resilience are not enough to indicate that growth will recover, keeping European Central Bank (ECB) easing speculation alive.

German wholesale prices and Eurozone industrial production stats due today could cause some late-week Euro movement if it surprises.

US Dollar News: Federal Reserve Interest Rate Cut Bets Keep US Dollar Tumbling

Since Wednesday’s cautious testimony from Federal Reserve Chairman Jerome Powell led to a rise in US interest rate cut bets, investors have been selling the US Dollar. This has helped GBP/USD recover from two-year lows.

Not much notable US data will be published today. PPI data from June could cause some movement if it surprises, but the US Dollar will likely remain under pressure as Federal Reserve interest rate cut bets dominate the outlook.

Canadian Dollar News: Static Following BOC Decision

While the Canadian Dollar remains relatively close to its best levels in over a year versus the Pound, yesterday’s Bank of England (BoE) news helped GBP/CAD recover slightly.

The Canadian Dollar was unable to hold its best levels after the Bank of Canada (BOC) took a slightly more cautious tone than expected on Wednesday. Canadian new housing price index data from May fell short of expectations which also limited CAD appeal.

No notable Canadian data will be published until next week now, but overall Canada’s economic outlook remains solid. As a result, CAD may avoid further losses.

Australian Dollar News: Fed Rate Cut Bets Keep ‘Aussie’ Buoyed

Due to the Australian Dollar being a high yielding trade-correlated currency, it has been more appealing since Federal Reserve interest rate cut bets began to rise again on Wednesday.

Mixed Australian consumer inflation and home loans data ultimately had little impact on the ‘Aussie’.

Australian Dollar investors are now highly anticipating next Tuesday’s session, when the Reserve Bank of Australia (RBA) will publish its latest meeting minutes. Any developments in US-China trade tensions could influence AUD as well.

Upcoming Data

Friday, 12th July

07:00    German Wholesale Prices

10:00    Eurozone Industrial Production

13:30    US PPI

Alastair Archbold
Currency Trader
T: 01442 892 062

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