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Pound Sterling Exchange Rate Boosted by Growth Figures and Brexit Optimism

Pound News: GBP Exchange Rates Upbeat on Growth Figures

Yesterday saw the UK Office for National Statistics (ONS) release August’s GDP growth numbers which revealed there was 0% growth during the month.

This was down from 0.4% in July and below expectations of a 0.1% rise.

Although this might seem disappointing at first pass, in this case GDP figures for the summer period were adjusted upwards to 0.7%, meaning that overall growth trend still remains within a margin of expectations and actually represents the fastest rate of growth since 2016.

At the same time, however, there was less positive news in the form of the UK trade balance during the same month, which sank to -£1.274bn, down from July’s -£0.572bn.

The ONS report also revealed that the UK construction sector was hit particularly hard, contracting by some 0.7%, while the service sector failed to show any growth.

Late in the day some resurgent Brexit optimism saw the Pound rise across the board

 

Euro News: EUR Still Reeling from Italian Budget Impasse

Italy’s ongoing dispute with the EU over its budget showed no sign of coming to an end yesterday, despite assurances from Italian Finance Minister Giovanni Tria that the government is ‘responsible’

For Euro traders, lunchtime will see the release of the European Central Bank (ECB) monetary policy meeting accounts.

The minutes will reveal what policymakers said at their last meeting, with traders seeking out information that supports the likelihood of higher interest rates in the future.

Any clear signs that higher rates are being considered by the ECB is likely to boost Euro demand.

 

US Dollar News: USD/GBP Drops on Fed President Kaplan’s Comments

US Dollar demand moderated yesterday afternoon as September’s US producer price index data came out somewhat mixed.

An unexpected decline in the headline annual PPI reading dented the appeal of the US Dollar, suggesting inflationary pressure was easing off.

Dallas Fed President Robert Kaplan indicated there should be a more gradual pace of interest rates, with his comments causing a curtailment of USD rates.

If other Fed policymakers adopt Kaplan’s cautious outlook this week the US Dollar could lose some of its recent strength.

Today’s US consumer price index may see USD rates trending higher if consumer inflation shows signs of picking up.

 

Canadian Dollar News: GBP/CAD Gains as Canadian Housing Figures Mixed

CAD fell against most of the majors yesterday, including GBP and USD.

One driver of this was the Canadian building permits figure for August, which printed at 0.4%, slightly below the expected 0.5% but an improvement on the previous month’s slide of -0.1%.

This comes after housing starts data for September came in below expectations on Tuesday, printing at 189k against expectations of 210k, and down from the previous month’s 200k.

Sticking with the housing theme, today sees the release of new house price index figures for August, with current expectations being that they will be flat compared to the month previous.

Nevertheless, with Brent crude prices sticking around the $85 mark, CAD is still getting considerable support despite supply constraint issues affecting oil deliveries.

 

Australian Dollar News: Better Consumer Sentiment Fails to Boost AUD

A modest rebound in October’s Westpac consumer confidence index gave only limited support to the Australian Dollar yesterday, with GBP/AUD sharply up by the late afternoon.

Analysts consider confidence in the health of the Australian economy is still limited in the face of ongoing global trade tensions.

With risk appetite currently low the potential for AUD exchange rate strength has proved lacking, keeping the antipodean currency in the region of recent multi-year lows against the Pound.

As markets maintain a generally bearish view of the Australian Dollar, the AUD/GBP exchange rate looks set to remain on a weaker footing today.

 

Upcoming Data

Thursday, 11 October, 2018

10:00              UK BoE Governor Carney Speech

12:30              EU ECB Monetary Policy Meeting Accounts

13:30              US Consumer Price Index (Sep)

13:30              CA New Housing Price Index (Aug)

 

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To keep up to date with the Euro, visit the Euro blog in our Currency News section.

Alastair Archbold

Currency Trader

aja@fcgworld.co.uk 

 

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