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Pound (GBP) Exchange Rates Plummet to Monthly Lows amid Brexit Fears

Pound News: UK Jobs Data Falls on Deaf Ears as No-Deal Brexit Fears Intensify

Continuing the downtrend seen since the beginning of the week, the Pound slumped yesterday. Investors sold the Pound in reaction to comments about Brexit from both the contenders to be Britain’s next Prime Minister.

Frontrunner Boris Johnson and his opponent Jeremy Hunt toughened their stances on Brexit, saying that they would not accept the Irish backstop as part of a Brexit deal. This upped the odds of a no-deal Brexit.

Investors ignored yesterday’s UK job data, despite a solid uptick in wage growth, and today’s upcoming UK inflation data could be received the same way unless it has a notable impact on Bank of England (BoE) interest rate cut bets.

Euro News: Weak German Confidence Data Weighs on EUR

While the Pound to Euro exchange rate fell yesterday, the Euro benefitted from the Pound’s weakness less than other major currencies did. This was because the latest Eurozone data continued to keep investors speculating that the European Central Bank (ECB) may take a more dovish stance.

Germany’s economic sentiment and current conditions stats showed deeper than expected contractions in confidence. As Germany is the Eurozone’s biggest economy, this news provided cause for concern.

This week’s most influential Eurozone data will be published today, in the form of the bloc’s final June inflation rate results. If Eurozone inflation falls short of expectations too, ECB interest rate cut bets will rise even higher.

US Dollar News: USD Rebounds after US Retail Data

Investors sold the US Dollar on Federal Reserve interest rate cut bets through the second half of last week, and since markets opened on Monday the currency has been rebounding strongly.

Yesterday’s US data further supported the US Dollar recovery. US retail sales beat expectations in both major prints, bolstering hopes that the Federal Reserve may not be as aggressively dovish as some investors speculate.

While most of this week’s most influential US data has been published already, today’s US building permits and housing starts figures could influence the US Dollar if they surprise investors.

Canadian Dollar News: CAD Remains One of the Market’s Strongest Currencies

The Canadian Dollar continues to be supported by a generally strong Canadian economic outlook. A slightly less hawkish than expected Bank of Canada (BoC), as well as weaker prices of oil, Canada’s most lucrative commodity, have not been enough to prompt a profit-taking selloff of the Canadian currency.

This afternoon will see the publication of this week’s most influential Canadian data. If Canadian inflation falls short of expectations, it could cause speculation of a more dovish than expected Bank of Canada.

Australian Dollar News: Trade Hope Keeps AUD Buoyed despite RBA Rate Cut Speculation

The Pound to Australian Dollar exchange rate continued to tumble to near its worst levels all year yesterday, despite the Reserve Bank of Australia’s (RBA) latest meeting minutes report being a little more dovish than expected.

The bank indicated that it was prepared to cut Australian interest rates lower if necessary. However, strong Australian commodity trade, as well as US-China trade hopes, kept the Australian Dollar climbing versus a weak Pound.

Australian Dollar investors could react to Australian leading index data from Westpac this morning, but Australia’s June job market report due for publication tomorrow is more likely to be significant for Australian Dollar movement.

Upcoming Data

Wednesday, 17th July

01:30    Australian Westpac Leading Index

09:30    UK Inflation Rate

10:00    Eurozone Construction Output

10:00    Eurozone Inflation Rate

13:30    Canadian Inflation Rate

13:30    US Building Permits and Housing Starts

Alastair Archbold
Foreign Exchange Manager

aja@fcgworld.co.uk

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