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GBP Firm before BoE Rate Decision, Hopes Rise for US-Canada Trade Deal

Pound News: Sterling Steady Ahead of Bank of England (BoE) Decision

Investors had little reason to move on the Pound on Wednesday. The currency continued to be supported by this week’s Brexit comments from EU Chief Negotiator Michel Barnier, but pressured by disappointment over Bank of England (BoE) Governor Carney’s short term extension.

As UK data has been fairly solid recently though, the primary thing still limiting the Pound’s strength has been persistent uncertainty about the kind of Brexit deal the UK and EU will end up with.

If the Bank of England plays down Brexit fears or plays up the resilience of Britain’s economy in its meeting today, the Pound could see stronger demand. However, Brexit developments are more likely to influential.

 

Euro News: Eurozone Data Deepens US-EU Trade Fears

The Euro has been unable to capitalise on the Pound’s slightly weaker performance since Tuesday, as Wednesday’s Eurozone factory data disappointed investors.

Eurozone industrial production unexpectedly contracted not just month-on-month but year-on-year too. The news caused concerns that US-EU trade uncertainties were having a bigger impact on Eurozone business activity than economists expected.

The Euro could see a significant shift in movement today, especially if the European Central Bank’s (ECB) September policy decision is surprising in some way.

 

US Dollar News: Trade Uncertainties Keep Pressure on USD

Uncertainties on US trade relations with major nations like China and Canada have left market appetite for safe haven currencies like the US Dollar mixed.

US-China trade tensions are expected to worsen, but speculation that the US and Canada could be closing in on a renegotiation of the North American Free Trade Agreement (NAFTA) dampened safe haven demand slightly and made investors less hesitant to take risks.

This week’s most influential US data will be published today. US Consumer Price Index (CPI) inflation rate figures could influence Federal Reserve interest rate hike bets and the US Dollar’s strength if they surprise investors.

 

Canadian Dollar News: Signs of US-Canada Trade Progress Gives CAD a Boost

The Canadian Dollar is turning out to be one of this week’s best performers, as the Pound to Canadian Dollar exchange rate slumped to a weekly low on Wednesday in reaction to news that the US and Canada could be closer to reaching a new trade deal.

Speculation that the US and Canada are making concessions and coming closer to reaching an agreement on dairy pricing between the nations, caused hopes to surge that the North American Free Trade Agreement (NAFTA) could be successfully renegotiated this month.

 

Canada’s July new housing price index stats will be published today and could influence the Canadian Dollar, but further developments in US-Canada trade negotiations are likely to be even more influential.

 

Australian Dollar News: Hopes for Trade Developments Support AUD

US-China trade tensions continue to keep pressure on the Australian Dollar, due to Australia’s close trade relations to both nations, but hopes for the US to reach a new trade deal with Canada did boost market risk-sentiment slightly.

The Australian Dollar pushed GBP/AUD back down from the week’s highs, despite Wednesday’s Australian consumer confidence data from Westpac disappointing investors.

Australian Dollar investors are likely to react to Australia’s anticipated August job market report today, but US trade developments could prove influential too.

 

Upcoming Data

Thursday, 13th September

02:00    Australian Job Market Report

07:00    German Inflation Rate

07:45    French Inflation Rate

12:00    Bank of England Policy Decision

12:45    European Central Bank Policy Decision

13:30    European Central Bank Press Conference

13:30    Canadian New Housing Price Index

13:30    US Inflation Rate

Jimi Boake

Currency Dealer

JLB@fcgworld.co.uk

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