- GBP Exchange Rate Mixed – EU referendum uncertainty weighs
- US Dollar Cools – Fed rate hike bets recede
- CAD Conversion Rate Struggles – Oil prices cool
- GBP/USD Forecast to Fluctuate on Political Uncertainty – Oil price to drive CAD movement
The Pound Sterling to US Dollar (GBP/USD) exchange rate was trending within a limited range on Monday afternoon.
Despite a complete absence of British ecostats to drive volatility today, the UK Pound fluctuated versus a number of its major peers. A slight err towards depreciation can be linked to the latest EU referendum opinion polls, which predict that the vote will be neck and neck.
Pound Sterling to US Dollar (GBP/USD) Exchange Rate Forecast to Trend Statically on EU Referendum Uncertainty
Once again, several high-ranking political figures have spoken about the danger of a ‘Brexit’, with Chancellor George Osborne warning the UK could enter a year-long recession if the UK votes to leave. Osborne also suggested that a ‘Brexit’ could cause the loss of over half a million jobs.
Osborne stated; ‘With exactly one month to go to the referendum, the British people must ask themselves this question: can we knowingly vote for a recession?’ He added: ‘It’s the working people of Britain who will pay the price if we leave the EU. None of this needs to happen if we vote to remain.’
However, this has been quashed by the ‘Leave’ campaign as no more than conjecture. Vote Leave campaigner Iain Duncan Smith said:
‘As George Osborne has himself admitted, the reason he created the independent forecaster, the OBR, was because by 2010 the public simply did not believe the Government’s own economic forecasts. The Treasury has consistently got its predictions wrong in the past. This Treasury document is not an honest assessment but a deeply biased view of the future and it should not be believed by anyone.’
The Pound Sterling to US Dollar (GBP/USD) exchange rate is currently trending in the region of 1.4477.
Meanwhile, the US Dollar edged higher versus a number of its major peers thanks to safe-haven demand. However, the US asset cooled from intraday highs following weaker-than-expected domestic data.
May’s Markit US Manufacturing PMI was predicted to rise from 50.8 to 51.0, but the actual result dropped to 50.5; dangerously close to the 50 mark that separates growth from contraction.
Commenting on the US Manufacturing PMI data, Chris Williamson, chief economist at Markit said: ‘The weak manufacturing PMI data cast doubt on the ability of the US economy to rebound from its disappointing start to the year in the second quarter. The survey is signalling that manufacturing will act as a drag on economic growth in the second quarter, leaving the economy once again dependent on the service sector, and consumers in particular, to sustain growth.’
The US asset has also lost ground amid concerns that optimism for a June rate hike was somewhat far-fetched. This is because the combination of EU referendum uncertainty, domestic political uncertainty and China’s economic woes does not provide a good environment for tighter policy.
The Pound Sterling to US Dollar (GBP/USD) exchange rate was trending within the range of 1.4455 to 1.4549 during Monday’s European session.
Pound Sterling to Canadian Dollar (GBP/CAD) Exchange Rate Forecast to Advance as Crude Prices Weaken
The Pound Sterling to Canadian Dollar (GBP/CAD) exchange rate edged fractionally higher by around 0.2% on Monday afternoon.
With a complete absence of domestic data to provoke volatility, the Canadian Dollar softened in response to falling crude oil prices and dampened market sentiment. The depreciation was somewhat slowed, however, thanks to reduced bets regarding a near-term Federal Reserve cash rate increase.
Oil prices fell after it emerged that several oil traders are having to borrow from banks to store crude at a loss. Enormous stockpiles of crude are currently floating on large ships as producers wait for prices to rise.
‘The increase in floating oil comes despite disruptions in the Atlantic Basin and an out-of-the-money floating storage arb[itrage], suggesting markets are not as healthy as sentiment suggests,’ Morgan Stanley analysts wrote. ‘It also highlights the speculative nature of much of the oil bounce this year.’
The Pound Sterling to Canadian Dollar (GBP/CAD) exchange rate is currently trending in the region of 1.9025.
Also reducing the appeal of the ‘Loonie’ (CAD) is mounting concern that the wildfire which destroyed much of Canada’s oil sands region will cost a significant amount in Canada’s export growth.
Damp market sentiment also limited the appeal of the Canadian Dollar today. Traders flocked to safe-haven assets after commodity prices declined and global equity markets endured marked volatility.
The Pound Sterling to Canadian Dollar (GBP/CAD) exchange rate was trending within the range of 1.9004 to 1.9096 during Monday’s European session.
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