- ‘Brexit’ Worries Severely Damage Sterling’s Appeal Today
- Concerns over Misspent UK Funds as Referendum Promotion Figures Emerge
- US Dollar Unsteady after Recent Fed Minutes Announcement
- Further USD Fluctuation likely on Impending Fed Chair Comments
The Pound has been unsettled today by the most recent UK economic developments, most of which have actually focused on the volatility-causing UK Referendum campaigns. Such symptomatic reactions are unfortunately only likely to increase as the vote date of June 23rd draws nearer.
The Referendum debate has provoked widespread argument already, with campaigners on both sides citing almost every factor of everyday life under the sun as a reason to vote for staying in or out of the European Union (EU).
UK Economic News: Validity of UK Referendum Campaigning Process Called into Question
The Pound (GBP) has made a large number of losses against its economic peers today, with these stemming primarily from continuing controversy over the fairness and feasibility of the ongoing campaigns to remain in or leave the EU.
On the exchange rate front, the Pound has fallen by -0.4% against the US Dollar (GBP/USD), -0.6% against the Norwegian Krone (GBP/NOK), -0.7% against the Chinese Yuan (GBP/CNY) and more than -1.1% against the Russian Ruble (GBP/RUB) and the Japanese Yen (GBP/JPY). This loss of the Pound against the US Dollar represents a reversal on earlier movement this week.
The latest damaging development to the Pound to come out of the UK Referendum has come from the revelation that the pro-EU Government, headed by PM David Cameron, will be seeking to spend around £9m on leaflets to produce and distribute to every home in the UK. These leaflets are expected to present the case for the UK remaining in the EU, although opponents have called the documents inaccurate and biased.
Particular scorn has come from prominent ‘Out’ campaigner Boris Johnson, who has said ‘Given that it’s very likely that [the leaflet] will be very biased…hysterical and warning unnecessarily about the risks of leaving the EU, I think it’s a complete waste of money’.
Johnson summarised the situation as ‘crazy’, while other ‘Leave’ supporters pointed out that their campaign was ostensibly getting only £7m to promote its cause.
US Dollar makes Irregular Movement after Fed’s March Minutes are Announced
The US Dollar (USD) has outperformed the Pound (GBP) overall today, although the ‘Buck’ has still recorded a number of losses against its competitors nonetheless. These declines have included -0.3% against the Norwegian Krone (USD/NOK) and -1.2% against the Japanese Yen (USD/JPY). On the other hand, gains of 0.4% against the Pound Sterling (USD/GBP) and 0.7% against the Australian Dollar (USD/AUD) have been recorded.
The most recent news from the US has been the announcement of the Federal Open Market Committee (FOMC) minutes for its March meeting. These have been broadly positive, although economists have been decidedly mixed on the precise timing of the two interest rate hikes that are potentially on the way. The minutes appeared to confirm at least this many hikes taking place, but also seemed to rule out the chances of a rate hike coming in April.
In a less optimistic development, it has recently been put forward by Societe Generale’s Albert Edwards that a recession in the US is ‘virtually inevitable’.
Future GBP and USD Forecast: UK Trade Data Out Tomorrow, Fed Chair Speech Scheduled Tonight
The next UK data due out isn’t due until tomorrow morning, and is expected to comprise of the nation’s industrial and manufacturing production results for February, along with the trade balance results for the same month.
On the whole, forecasts have been extremely mixed; a rise has been predicted for the monthly industrial outcome, while conversely a dip from 0.2% to 0% is expected on the year. Manufacturing is expected to dip on the month and the year, while mild reductions in the current trade deficit are expected for the visible and total trade balances.
The US’s next economic event to watch out for is due tonight, and will consist of any comments made by Fed Chair Janet Yellen at International House in New York. Yellen is due to make remarks alongside former heads of the Federal Reserve, who include Ben Bernanke, Alan Greenspan and Paul Volcker.
Naturally, hawkish comments are far more likely to benefit the currently uncertain US Dollar (USD) than dovish ones.
Current GBP, USD Exchange Rates
The Pound Sterling to US Dollar (GBP/USD) exchange rate was trending in the region of 1.4083 and the US Dollar to Pound Sterling (USD/GBP) exchange rate was trending in the region of 0.7103 today.
Comments are closed.