Rising UK Consumer Confidence Not Enough to Push Pound Into Positive Territory
UK consumer confidence has edged further into optimistic territory with the index rising unexpectedly from 1 to 2. Traders are likely more focussed on today’s public sector borrowing figures, which last month revealed a shock deficit of -£4 billion in public finances. As a result, Pound Sterling is trending narrowly in the negative region against the US Dollar and the Canadian Dollar.
Yesterday…
Pound Sterling Slumps After CBI Reported Sales Figures Fail to Meet Expectations
Usually the CBI Reported Sales figures for the UK would be a relatively minor release, however with today’s thin trading volume, the news that sales have failed to grow as much as forecast has weakened Pound Sterling. Despite the index leaping up from 7 to 19, investors have noticed that the final figure undercut the forecast by two points.
As a result, Pound Sterling is trending narrowly in the negative region against the US Dollar, although it is still 0.3% up against the Canadian Dollar.
Earlier…
A slow data day for Pound Sterling (GBP) has allowed the US Dollar (USD) and the Canadian Dollar (CAD) to appreciate. A meeting of Canadian regional finance ministers has made investors hopeful that economic reforms will help battle the weakening effects of the global oil crisis, while a US Federal Reserve president has given some indication of the future of US interest rates.
Pound Sterling to US Dollar (GBP/USD) Bearish as San Francisco Federal Reserve Banker Claims Interest Rates Will Stay Low
After last week’s highly anticipated and unanimous decision by the Federal Reserve to raise interest rates for the first time in nearly 10 years, trader focus has already turned to thinking about when the next rise will come. According to Fed funds futures prices, traders expect interest rates will be held in the January 2016 meeting, with only a 10% likelihood of a rise past the 0.50% mark, while there is a 47% probability of a 0.25% increase in March. There is a 25% chance that the interest rates will be between 0.75-1.0% after the July meeting, with a 6% probability of rates between 1.0% and 1.25%.
The US Dollar has been buoyed by comments from John Williams, President of the San Francisco Federal Reserve Bank, who has suggested that years of stagnant interest rates are in the past, claiming that in the future: ‘Every meeting will truly be live in terms of adjusting policy one way or the other.’
Interest rate rises will be gradual and in small increments, Mr Williams has said, explaining that the Fed: ‘are going to run a higher-pressure economy for a while.’
Pound Sterling to Canadian Dollar (GBP/CAD) Exchange Rate Forecast: ‘Loonie’ Strong Ahead of Wednesday Growth Data Release
While the global oil supply and price crises continue, with WTI crude dropping to US$34.73 per barrel and Brent falling to an 11-year low, the Canadian Dollar is currently up 0.2% against Pound Sterling and the US Dollar. Provincial finance ministers are currently meeting in Ottawa to discuss reforms to the economy and pensions, with the debate chaired by federal Finance Minister Bill Morneau. Investor confidence has been buoyed by the talks, which have a central objective of finding ways to boost the Canadian economy in the wake of slumping global commodity prices.
According to Mr Morneau: ‘My goal working with the provinces is to have a discussion about how we can grow the overall size of the pie for Canadians. We know that Canada isn’t doing well in all parts of the country, in particular.’
Canadian Gross Domestic Product figures are due out on Wednesday and, despite the weakness caused by the slump in ‘black gold’ prices, are expected to show that the economy grew 0.2% in October after contracting -0.5% the previous month. Year-on-year (YoY) GDP is expected to remaining flat, while monthly Retail Sales are predicted to show a 0.4% rise after shrinking in September.
Pound Sterling to US Dollar, Canadian Dollar: GBP/USD, GBP/CAD Exchange Rate Forecast
There is no economic data due for Canada today, although news from the meeting of finance ministers in Ottawa could have an impact on the ‘Loonie’ (CAD). The sole piece of data available for the UK is the CBI reported Sales index, which is expected to rise significantly from 7 to 21. The US lacks any significant data today.
The Pound Sterling to US Dollar (GBP/USD) exchange rate is currently trending in the region of 1.4891, while the US Dollar to Pound Sterling (USD/GBP) exchange rate is trading around 0.6715.
The Pound Sterling to Canadian Dollar (GBP/CAD) exchange rate is trending around 2.0759, with the Canadian Dollar to Pound Sterling (CAD/GBP) trading in the region of 0.4814.
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