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‘No Deal’ Brexit Jitters Keep Pressure on Sterling, Reserve Bank of Australia Remains Cautiously Optimistic

Pound News: GBP Steadies Following Monday Selloff but Demand Remains Low

Monday saw the Pound sold off against most other major currencies amid concerns that Britain was headed towards a ‘no-deal’ Brexit, and while the selloff slowed on Tuesday the British currency wasn’t able to recover.

Investors are still highly anxious about the possibility that the UK could leave the EU without a deal in place in March 2019.

There won’t be any notable UK ecostats published today, and even Friday’s UK growth report may only have a limited impact on Sterling if Brexit uncertainties remain in focus. Essentially, Pound investors are anticipating Brexit developments and very little else at present.

Euro News: US-Eurozone Trade Jitters Lighten as EUR Firms

The Euro’s gains against a weak Pound were limited on Monday as investors reacted to disappointing German factory data.

However, Tuesday’s German trade balance results calmed investors somewhat, with the data indicating that Germany’s slower June activity was more likely to be temporary than the beginning of a prolonged downturn. This lessened US-Eurozone trade anxiety and made the Euro more appealing on Tuesday.

The Eurozone economic calendar will be a little quieter for the rest of the week, but if there are any developments in US-Eurozone trade relations this could influence the Euro today.

US Dollar News: Solid Economic Optimism Keeps USD Resilient

The Pound was unable to sustain a comeback against the US Dollar on Tuesday, despite the US Dollar’s weaker performance in general. This was due largely to broad Pound weakness on Brexit fears.

The latest US data further helped to support US Dollar movement. IBD/TIPP economic optimism data from August beat forecasts, climbing from 56.4 to 58. Furthermore, the latest JOLTs job openings data also indicated that there were more new jobs available than predicted.

The US Dollar is likely to remain relatively resilient today despite a lack of fresh data, but investors may opt to sell the currency from its recent highs in profit-taking moves.

Canadian Dollar News: Rising Oil Prices Keep CAD Appealing

The Canadian Dollar continues to sustain gains against the crippled Pound this week. This was despite Tuesday’s Canadian Ivey PMI report falling short of forecasts and sliding from 63.1 to 61.8.

Tuesday’s Canadian Dollar resilience was largely due to rising prices of oil, Canada’s most lucrative commodity. Oil prices have been climbing recently due to US sanctions against Iran, a major oil exporter.

Canadian building permits data from June will be published today, but the trade-correlated Canadian Dollar may be more heavily influenced by developments in oil prices or US trade news instead.

Australian Dollar News: Cautious Optimism from RBA Drives AUD Higher

While trade tensions between the US and China persist, they have taken a backseat in recent sessions. A strong performance in Chinese markets has actually bolstered market demand for the Australian Dollar, as China is Australia’s biggest trade partner.

Tuesday also saw the Reserve Bank of Australia (RBA) hold its August policy decision. The bank maintained its cautiously optimistic tone, making investors more hopeful that it didn’t believe Australia would be significantly impacted by US-China trade tensions.

Australian Dollar traders will be reacting to some home loans data today, and a speech from RBA Governor Philip Lowe. Potential global trade developments could, as ever, influence AUD too.

Upcoming Data


Wednesday, 8thth August

02:30    Australian Home Loans

02:30    Australian Investment Lending for Homes

04:00    RBA Governor Lowe Speech

12:00    US MBA Mortgage Applications

13:30    Canadian Building Permits


Joe Mayhew

Currency Trader

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