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Pound Sterling Exchange Rate Gains Limited by IMF’s Brexit Warning

Pound News: GBP Exchange Rates Static after IMF’s Mixed Brexit Forecast

Yesterday saw the Pound trade steadily against most of its regular currency peers, with International Monetary Fund (IMF) remarks limiting Pound Sterling demand.

IMF officials implied that the Bank of England (BoE) could cut interest rates and warned about the dangers of a no-deal Brexit, but also expressed hope for a viable Brexit arrangement.

This morning will bring a number of major UK data releases, including August’s trade balance, GDP and construction output stats.

Current expectations are for a larger UK trade deficit, GDP growth slowdown and reduction in construction output – all three results matching forecasts could cause GBP losses.


Euro News: EUR Losses Seen on Italian Budget Crisis

Italy’s continued clash with the European Commission (EC) drained confidence among Euro traders yesterday, which led to a minor EUR/GBP exchange rate decline.

Italian Finance Minister Giovanni Tria supported maintaining a dialogue with the EC, but also continued to back the budget conditions that the EC found so objectionable in the first place.

Apart from a surprise resolution to Italy’s spending issues, the Euro could next be influenced by Thursday’s European Central Bank (ECB) meeting accounts.

If the accounts reveal that policymakers are considering a 2019 interest rate hike then the Euro could advance against the Pound.


US Dollar News: USD/GBP Exchange Rate Steady on Last Week’s Jobs Stats

The US Dollar and the Pound traded tightly on Tuesday, with neither currency making definitive gains.

US news was limited, but IMF officials still mentioned the US in their World Economic Outlook.

IMF analysts forecast more interest rate hikes in the future, but downgraded 2019’s US growth forecasts on the assumption that unwinding quantitative easing (QE) would limit expansion.

This afternoon and evening will bring speeches from Federal Reserve policymakers Charles Evans and Raphael Bostic – if both back continued Fed interest rate hikes then the US Dollar could trade higher against the Pound.


Canadian Dollar News: GBP/CAD Gains Losses Reported on Competitiveness Concerns

The Canadian Dollar dipped against the Pound on Tuesday, with Pound Sterling taking advantage of concerns about Canada’s tax rates.

Although last week brought optimism about a new North American trade deal, this week has seen CAD traders focus on Canada’s rates of corporation tax compared to the US.

The US dropped its corporate tax rates in late 2017 and Canada has not followed suit, which hands a significant advantage to the US when it comes to securing future investment.

This afternoon will bring Canadian building permits data for August, which is expected to show a 0.5% rise in permits granted.

Such a result could cause CAD/GBP exchange rate gains, given that more permits being granted could lead to increased construction sector activity.


Australian Dollar News: AUD Stable against GBP on Rising Business Confidence

The Pound failed to make any real headway against the Australian Dollar on Tuesday, with early support from business confidence data supporting the AUD/GBP exchange rate.

NAB reported a minor rise in Australian business confidence during September, with a slight shift from 5 points to 6.

As with the UK and US, the Australian Dollar might be influenced by a central bank speech this evening.

In the Australian Dollar’s case, remarks from Reserve Bank of Australia (RBA) policymaker Luci Ellis could boost the AUD/GBP exchange rate if they are deemed supportive.


Upcoming Data

Wednesday, 10 October, 2018

09:30              UK Balance of Trade (Aug)

09:30              UK GDP (Aug)

09:30              UK Construction Output (Aug)

13:30              CA Building Permits (Aug)

17:15              US Fed Evans Speech

23:00              US Fed Bostic Speech

23:30              AU RBA Ellis Speech


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


Adam Wiffen

Currency Trader

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