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Pound (GBP) Under Pressure as BoE Slashes Economic Growth Forecasts

Published: 1 Aug at 4 PM Tags: Euro, Dollar, Pound Sterling, America, UK, Eurozone, Australian Dollar, New Zealand Dollar, Canadian Dollar, Australia, New Zealand, USA, Canada, China, Germany,

Pound Sterling (GBP) Under Pressure as BoE Leaves Rates Unchanged

The Pound continued to slump on Thursday as data revealed that July’s Markit manufacturing PMI was left stuck at a six-and-a-half year low of 48.

Meanwhile, the Bank of England (BoE) left rates unchanged. However, in its last economic forecasts before the UK is scheduled to leave the EU, the bank slashed its economic growth forecasts.

Growth is now expected to reach 1.3% in both 2019 and 2020 if the UK avoids a disorderly exit. This is down from May’s forecasts of 1.5% and 1.6% growth this year and next.

Looking ahead to Friday, the Pound could continue to slide following the release of the UK’s construction PMI. If the construction sector remains in contraction territory, Sterling sentiment will be left dampened.

Pound Euro (GBP/EUR) Exchange Rate Flat as Eurozone Manufacturing Slumps to Six-and-a-Half Year Low

The Pound Euro (GBP/EUR) exchange rate remained muted as data revealed Germany’s manufacturing PMI hit an 84-month low of 43.2 in July.

Meanwhile, Eurozone manufacturing slumped to a six-and-a-half year low of 46.5 in July from June’s reading of 47.6. Added to this, confidence in the wider bloc hit its lowest levels since December 2012.

Looking ahead to Friday morning, the Eurozone’s retail sales data could provide a slight upswing in support for the single currency. If sales rise higher than forecast in June it could buoy the Euro.

Pound US Dollar (GBP/USD) Exchange Rate Slides to 31-Month Lows as the Fed Rules Out Series of Rate Cuts

The Pound US Dollar (GBP/USD) exchange rate touched 31-month lows on Thursday as the US Federal Reserve slashed interest rates for the first time in a decade.

Despite slashing rates, Fed Chair Jerome Powell’s hawkish comments that ruled out a lengthy series of rate cuts provided the Dollar with an upswing of support.

However, on Thursday afternoon data revealed that July’s US manufacturing PMI slumped to its lowest level since September 2009 and employment slipped for the first time since June 2013.

Meanwhile, it is likely the ‘Greenback’ will remain under pressure at the end of the week. If the US non-farm payrolls data reveals a lower than expected increase in new jobs added to the economy, the Dollar could slump.

Pound Canadian Dollar (GBP/CAD) Exchange Rate Flat as Canadian Manufacturing PMI Hits Four-Month High

The Pound Canadian Dollar (GBP/CAD) exchange rate remained muted on Thursday afternoon as the Canadian manufacturing PMI hit a four-month high in July. The PMI edged up from 49.2 to 50.2 in July.

Meanwhile, the oil-sensitive ‘Loonie’ remained flat following the US Federal Reserve rate cut, as the price of oil slumped for the first time in six days.

Commenting on this, Tamas Varga of oil broker PVM noted: ‘A relatively upbeat mood in risky assets took a spectacular U-turn after last night’s Fed decision. The dollar started to strengthen and equities and oil went into a kind of meltdown mode.’

Looking ahead to Friday afternoon, the Canadian Dollar could edge up against the Pound following the release of the Canadian trade balance. If data reveals that exports rise higher than forecast, it could buoy the ‘Loonie’.

Pound Australian Dollar (GBP/AUD) Exchange Rate Slips as Aussie Manufacturing Rebounds in July

The Pound Sterling Australian Dollar (GBP/AUD) exchange rate slumped on Thursday as data revealed the Australian AiG manufacturing index returned to growth in July. The index edged up from last month’s 49.4 to 51.3.

This provided the ‘Aussie’ with an upswing of support as July’s reading rebounded from June’s first sub-50 level in 33-months.

Meanwhile, on Friday Australia’s retail sales could buoy the Australian Dollar. If June’s sales rise higher than forecast, ‘Aussie’ sentiment could increase.

Pound New Zealand Dollar (GBP/NZD) Exchange Rate Falls as China Announces September US-China In-Person Talks

The Pound New Zealand Dollar (GBP/NZD) exchange rate slumped as the China Commerce Ministry revealed that a second round of US-China face-to-face talks were scheduled for September.

Reports revealed that US and Chinese officials are preparing ‘good groundwork’ for next month’s round of trade talks.

Meanwhile, the ‘Kiwi’ could rise against the Pound following the release of July’s ANZ consumer confidence. If confidence rises higher than forecast, it could provide the New Zealand Dollar with an upswing of support.

As of Thursday, 1st August 2019, the Pound Sterling currency rates mentioned within this news item were as follows:

GBP EUR exchange rate was 1.0941, GBP USD exchange rate was 1.2122, GBP AUD exchange rate was 1.7823, GBP NZD exchange rate was 1.8504, GBP CAD exchange rate was 1.6018, and GBP CNY exchange rate was 8.3625.
Dominic Lee About Author: (474 Posts)With over ten years experience as an economist – including four years spent as a chief economist with a major currency broker – Dominic has acquired a wealth of knowledge which he uses to forecast market movements. Dominic now works as an independent business advisor and writes for several financial publications.

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