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Pound Selloff Continues on ‘No Deal’ Brexit Speculation, AUD Strength Limited by Australian Data

Pound News: ‘No Deal’ Brexit Fears Keep Pound Tumbling

Despite a lack of fresh developments on Wednesday, investors continued to sell the Pound amid this week’s general focus on the possibility of a ‘no deal’ Brexit becoming reality.

Amid expectations that things might get worse for the British currency’s outlook before they improve, Sterling has been highly unappealing, especially with the UK and EU not expected to agree to any Brexit plan until around October.

No notable UK data will be published today, and even tomorrow’s key UK growth figures may have a limited impact on Sterling as investors focus on Brexit developments instead.

 

Euro News: EUR Lacks Fresh Support

The Euro climbed higher against the Pound on Wednesday due to broad Pound weakness and general steadiness in the Euro outlook.

However, the shared currency’s strength is limited due to a lack of fresh supportive Eurozone news. Most of the Euro’s strength this week has been due to weakness in major rivals like the Pound and US Dollar (USD).

That movement is likely to continue for the remainder of the week, unless today’s European Central Bank (ECB) economic bulletin or Friday’s French industrial production results surprise investors.

 

US Dollar News: Trade Uncertainties Weigh on USD Rally

The US Dollar’s recent strong streak paused again on Wednesday, making it easier for rivals like the Euro (EUR) to avoid losses against the US currency. This was largely due to news that China was planning to introduce new trade tariffs on US goods.

Sterling was unable to hold its ground against the US Dollar though, and GBP/USD fell to new 11-month-lows.

US PPI and wholesale inventories data will be published today, but unless the data is particularly surprising the Pound is unlikely to recover much against the US Dollar ahead of Friday’s key US inflation data.

 

Canadian Dollar News: CAD Sustains Gains Despite Tuesday Selloff

On Tuesday, investors sold the recently strong Canadian Dollar from its best levels in profit-taking, partially influenced by fresh diplomatic tensions between Canada and Saudi Arabia, as Saudi Arabia announced it would stop importing Canadian wheat and barley.

However, a weak Pound meant GBP/CAD was pushed back down towards its lowest 2018 levels on Wednesday. This was despite Canada’s June building permits results coming in with a surprising contraction of -2.3%.

 

More Canadian housing data will be published today, including housing starts from July and new housing price index stats from June. CAD investors are more likely to react to US trade developments and anticipate Friday’s Canadian job market results.

 

Australian Dollar News: AUD Fails to Hold Highs as Australian Data Disappoints

Wednesday’s Australian data came in well short of expectations, and this (coupled with the latest US-China trade spat developments) left the Australian Dollar as one of Wednesday’s less appealing major currencies.

On Wednesday, China announced that it would introduce new tariffs on Chinese imports of US goods. As China is Australia’s biggest trade partner, investors were hesitant to buy the Australian Dollar as US-China trade jitters worsened again.

Developments in the US-China trade spat are likely to continue driving Australian Dollar movement today, at least ahead of Friday’s Reserve Bank of Australia (RBA) monetary policy statement report.

 

Upcoming Data

Thursday, 9th August

10:00    ECB Economic Bulletin

13:15    Canadian Housing Starts

13:30    Canadian New Housing Price Index

13:30    US Jobless Claims

13:30    US PPI

15:00    US Wholesale Inventories

 

Jimi Boake

Currency Dealer

JLB@fcgworld.co.uk

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