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Pound Slumps as BoE Cuts Growth Forecasts, Canadian Dollar Pushes Higher Ahead of Jobs Data

Pound News: Dovish BoE Weighs Heavily on GBP Rates

Even though markets had largely expected the Bank of England (BoE) to leave interest rates on hold at its May policy meeting the Pound (GBP) still slipped in the wake of the announcement.


GBP exchange rates came under renewed pressure as the BoE’s growth forecasts were found to have been revised lower, with growth in 2018 now expected to clock in at only 1.4% rather than 1.8%.


While Governor Mark Carney indicated that an interest rate hike remains on the table the mood towards the Pound is unlikely to materially improve ahead of the weekend.



Euro News: No Surprises from ECB Economic Bulletin

Reaction to the European Central Bank’s (ECB) latest Economic Bulletin proved rather limited, allowing Euro (EUR) exchange rates to recover ground yesterday.


Although the ECB looks set to leave monetary policy on hold this came as no real surprise to investors.


However, if Italy’s populist Five Star Movement and the League cement an alliance to form the next Italian government this could put fresh pressure on the Euro.



US Dollar News: Mixed Inflation Data Dents US Dollar Bullishness

An element of disappointment greeted April’s US consumer price index data, which was not as solid as investors had hoped.


US Dollar (USD) exchange rates faltered as the core and monthly CPI measures failed to strengthen as forecast, undermining confidence in the inflationary outlook.


Any weakening of the University of Michigan sentiment index may give the US Dollar further cause for softness this afternoon.



Canadian Dollar News: Volatility Forecast on Latest Jobs Data

The Canadian new housing price index failed to impress in April as prices stagnated on the month.


Even so, the downside potential of the Canadian Dollar (CAD) was limited on Thursday thanks to the relative bullishness of the oil market.


CAD exchange rates could weaken, however, if today’s raft of Canadian jobs and wage data does not point towards a tightening of the domestic labour market.



Australian Dollar News: Risk Appetite Recovery Boosts ‘Aussie’

With market risk appetite generally picking back up yesterday the Australian Dollar (AUD) was able to recover some of the previous day’s losses.


Weaker US data offered support to the risk-sensitive ‘Aussie’, even in the wake of underwhelming Chinese inflation data.


Any resurgence in geopolitical tensions may well send AUD exchange rates on a fresh downtrend today as markets wind down ahead of the weekend.



Upcoming Data


Friday, 11 May

13:30     Canada Unemployment Rate

15:00     US University of Michigan Sentiment Index


Jessica Coot

Currency Trader

T: 01442 892 065

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