Political Uncertainty Drives Sterling down
Yesterday saw the Pound continue to lose significant ground against most of the majors as election hysteria and uncertainty continued to grip the currency market.
There were three primary events that caused further negative movement for the Pound: Moody’s cautioned that the failure of achieving a majority government was a serious issue for the UK’s credit rating, Brexit Minister David Davis issued a statement affirming that they had not changed their stance on Brexit, and finally the Queen’s speech has been delayed, in order to give time for a deal to be struck between the Conservatives and the Democratic Unionist Party (DUP).
Today’s Outlook
This morning kicked off with the release of the UK Consumer Price Index (CPI), which demonstrated a leap in inflation to 2.9% – against forecasts of 2.7%. Despite the negative implications of this, in terms of the impact upon real wages and therefore consumer spending, as of 10:00am, the Pound seems somewhat unperturbed by its slump – even seeing some small gains against the majors.
The Pound Hits a Seven-Month Low against the Euro
Yesterday Sterling fell almost a cent against the Euro – a new seven-month low.
The delay of the Queen’s speech essentially further affirmed uncertainties for Sterling as all parties and businesses await some form of grounding in the future of UK politics. Any hope that some traders housed regarding the possibility of a softer Brexit following the lack of a Conservative majority has taken a hit, as Brexit Minister David Davis announced that their stance remains unchanged.
Today’s Outlook
Despite a slew of controversies and uncertainties, the Pound is stabilising somewhat against the Euro this morning. Any climbs should, however, be taken with a grain of salt, as until the big announcements are made regarding the Conservative-DUP deal extreme turbulence is likely.
Cable Continues its Slump
‘Cable’ slumped like most of the other major Sterling pairs yesterday as doubt and indecision regarding the UK’s political standing caused investors to sell.
Yesterday saw Trump open a new coal mine in Pennsylvania, touted as proof that deregulation will bring back jobs to industry. The mine is expected to create some 100 jobs and further demonstrates the president’s loyalty to Reagan-era levels of deregulation. Signs of further job growth will be good for the US Dollar.
Today’s Outlook
Attorney General Jeff Sessions is due to testify in a public hearing today regarding the Russia involvement probe. Should his statements prove to increase confidence in Trump’s position, this will in turn increase confidence in the US Dollar.
Despite this morning’s gains for the GBP USD pairing, the sheer amount of uncertainty regarding Sterling is likely to continue until political stability in the UK is realised.
The Pound Reaches Two-Month Lows against the Canadian Dollar
Yesterday the Pound fell to two-month lows against the Canadian Dollar as anxious traders sold in the wake of political instability in the UK.
The ‘Loonie’ was bolstered somewhat with the release of the US oil inventories demonstrating a fall of -1.8 million barrels and announcements that Qatar also intends on keeping its OPEC pledge. These both signified positive things for the price of crude oil.
Today’s Outlook
GBP CAD fluctuations this morning have been small but somewhat positive. Traders await news regarding Theresa May’s partnership with the DUP with an anxious eye on the price of crude oil.
Sterling Continues to Slide against Australian Dollar
The Pound to Australian Dollar exchange rate continued to slide yesterday, almost settling on a two-month low as the markets continue to react to an uncertain UK outlook.
Monday saw a rise in iron ore prices with the most traded on the Chinese Dalian Commodity Exchange rising 2% – promising news for the Australian Dollar, despite worries of blooming glut in supply.
Today’s Outlook
Australia’s NAB Business Confidence Data for today came back somewhat negative too, with a score of 7 compared to last month’s 13. This survey provides some insight into the condition of Australia’s economy, and the direction it is believed to be headed. This morning sees the Pound making some small gains against the Australian Dollar as a result of this.
New Zealand Dollar Grows Stronger against the Pound
Yesterday saw Sterling stumble even lower against the New Zealand Dollar following anxieties that the hung parliament could seriously negate Britain’s ability to negotiate a strong exit from the European Union.
Today’s Outlook
Big data for New Zealand today will be the release of their current account balance, giving some insight into how the antipodean nation’s domestic economy is functioning in regards to the rest of the world. The forecast for this, and in turn the New Zealand Dollar, is currently positive following the promising recent dairy products auction.
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