GBP: Pound Sterling Stumbles on Weak UK GDP
Whilst the Pound rebounded against the majors yesterday (despite some warnings from the Bank of England) it has since fluctuated back and forth following new hawkish comments from Carney and a disappointing UK GDP print.
Carney disappointed many when he took to the stand yesterday at the BoE Independence Conference and neglected to discuss monetary policy, instead highlighting various concerns about Brexit. This morning, however, Carney reiterated his expectations that the bank will raise interest rates soon.
On the BBC’s Today programme Carney stated:
‘We can see that in the coming months, if the economy continues on this track, it may be appropriate to raise interest rates’.
This soundbite drove Sterling higher, though the UK’s disappointing headline GDP print of 1.5% (down from the forecast and previous period’s 1.7%) soon stopped this rise in its tracks, leaving the Pound down against all of the majors.
GBP/EUR: Robust Eurozone Inflation Propels Euro
The Euro was bolstered yesterday by the release of a strong set of data prints, notably the Eurozone economic confidence indicator which printed at 113, up from the previous period’s 112 and the expectation of 111.9.
Preliminary German inflation figures proved steady with the annual reading for September printing at 1.8% and the monthly at 0.1%.
Amongst today’s vast swathe of data releases, the Eurozone’s consumer price inflation printed at 1.5% year-on-year in September, unchanged from the previous period’s high and below the market expectation of 1.6%.
In addition, Germany’s seasonally adjusted jobless total dropped by 23k in September, hitting 2.5 million compared to the 6k decline in August and the market expectation of only a 5k drop, overall leaving Eurozone data mostly positive and GBP EUR floundering.
GBP/USD: Pound US Dollar Volatile before US Data Prints
The Pound US Dollar exchange rate stumbled this morning in the wake of disappointing UK GDP figures and some optimistic momentum for the ‘Greenback’ resulting from US President Donald Trump’s new tax reform proposal.
Markets will, however, be carefully awaiting today’s US personal consumption expenditure (PCE) figures, as well as the Michigan expectation readings for inflation, consumer sentiment and current conditions.
The Pound may be afforded some wiggle room if the PCE figures print negatively, though markets currently predict the headline figure to jump from 1.4% to 1.5%.
With most of the UK’s data prints now out of the way, such an event would cement the ‘Greenback’s lead into the weekend.
GBP/CAD: Pound Canadian Dollar Falls Despite Warnings from BOC Governor
The Pound Canadian Dollar exchange rate has fallen today despite dovish warnings from Bank of Canada (BoC) Governor Stephen Poloz, who cautioned that the latest Canadian data prints pointed more towards slowing growth within the Canadian economy.
Given the BoC’s recent stint in raising interest rates markets were keen to see a continuation of this activity, though following the remarks of Poloz such an eventuality might be further away than originally anticipated.
Whilst this did initially propel GBP CAD, the ‘Loonie’ soon overtook the Pound following the UK’s disappointing GDP print.
Markets now sheepishly await Canada’s GDP figures which are due at midday and are forecast to drop annually for July from 4.3% to 3.9%.
If this occurs then the Pound may claw back some losses.
GBP/AUD: Pound Australian Dollar Stumbles, Bearish Before US Data Prints
Lacking notable data of its own the Australian Dollar has been somewhat bearish today with investors eagerly awaiting the upcoming US data prints.
In addition, yesterday’s speech from the Reserve Bank of Australia Governor Guy Debelle did not directly discuss monetary policy, an absence that has left the ‘Aussie’ Dollar predominantly in a reactionary stance today.
Should data from the US prove positive then the ‘Aussie’ may find itself under pressure, which could, in turn, allow GBP AUD to climb.
GBP/NZD: Pound New Zealand Dollar Fluctuates on Dovish RBNZ
Whilst the Pound did rally against the New Zealand Dollar following yesterday’s dovish rate decision from the Reserve Bank of New Zealand (RBNZ), it has since fallen in the wake of the UK’s weak GDP print.
The RBNZ unsurprisingly left rates on hold at 1.75%, with the vast majority of the accompanying statement left unchanged save a small negative revision to the growth outlook, from; ‘expecting to improve going forward’ to ‘maintain its current pace’.
The UK’s disappointing GDP print will likely continue to encumber GBP NZD into the trading week’s end, however, especially considering Carney’s recent comments that a rate hike is dependent on the economy ‘remaining on track’.
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