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Pound Sterling Exchange Rates Decline on Business Uncertainty over Brexit

Pound News: GBP Weakened by Falling Business Confidence over Brexit

Pound Sterling traded tightly against the Euro yesterday and fell against the US Dollar, following news of falling UK business confidence.

Among other issues, UK business owners reported that the high level of uncertainty surrounding the Brexit process was the cause of their waning optimism.

This afternoon will bring a speech from Bank of England (BoE) policymaker Ben Broadbent, who will be discussing ‘The Use of RPI’ at a House of Lords Economic Affairs Committee hearing.

While Mr Broadbent isn’t due to discuss monetary policy, he could still touch on issues like future interest rate decisions.

If there is even a hint of a 2019 interest rate hike being on the table, the Pound could rise sharply against its regular peers.

Euro News: EUR Demand Limited by Continuing Italian Budget Issues

The Euro traded in a narrow range against the Pound on Monday, with a lack of resolution over the Italian budget reducing demand for the single currency.

Matters weren’t helped by Germany’s industrial production data for August, which showed another negative reading.

The Euro could bounce back and advance against the Pound on Friday, if German inflation is reported higher on September’s readings.

US Dollar News: USD Supported by Historically Low Unemployment Rate

The US Dollar firmed against the Pound yesterday, having been supported by last week’s strongly supportive jobs market data.

The unemployment rate in August was reported at its lowest level since 1969, while a surprisingly low number of jobs being added was blamed on the exceptional circumstance of Hurricane Florence.

As in the UK, there will be a speech from a US central bank policymaker this afternoon – in this case Charles Evans.

Mr Evans isn’t voting on US interest rates this year, but might still mention them when he opens the Opportunity Finance Network (OFN) Conference.

Similar to the BoE, if there is any mention of raising interest rates next year then the US Dollar could rise sharply against the Pound.

Canadian Dollar News: CAD/GBP Exchange Rate Tight on US Dollar Strength

With little direct data to influence the GBP/CAD exchange rate yesterday, the Pound and Canadian Dollar traded tightly because of the stronger US Dollar.

The next notable Canadian data will come on Wednesday, consisting of building permits figures for August.

These are tipped to show a 0.5% rise in the quantity of permits granted, which might reassure Canadian Dollar traders and trigger a CAD/GBP exchange rate rise.

Australian Dollar News: GBP/AUD Losses Seen on ahead of Confidence Data

Despite there being little Australian domestic data on Monday, the GBP/AUD exchange rate still declined because of late-day support for the Australian Dollar.

The Australian Dollar could rise further against the Pound Sterling on Wednesday morning, when a consumer confidence reading is due out.

This is tipped to show higher consumer sentiment levels during October, which could raise the Australian Dollar’s value.

 

Upcoming Data

Tuesday, 9 October, 2018

15:00              US Fed Evans Speech

15:35              UK BoE Broadbent Speech

 

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

 

James Baxter

Currency Trader

jsb@fcgworld.co.uk

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