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Sterling (GBP) Under Pressure Ahead of BoE Meeting

Published: 5 Nov 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 UK Service Sector Stagnates

The Pound (GBP) was left under pressure on Tuesday after data revealed the UK services sector was left flat in October as new business fell for the second month in a row.

Brexit uncertainty dented the sector, with the latest figure below trend, and was left at around the lowest level in ten-and-a-half years.

Looking ahead, it is likely Sterling will remain under pressure ahead of Thursday’s Bank of England (BoE) monetary policy meeting.

The bank is expected to leave interest rates unchanged as forecast, but GBP is likely to slide if policymakers signal the BoE may need to lower rates thanks to further political uncertainty.

Pound Euro (GBP/EUR) Exchange Rate Rises as German Manufacturing Stuck in Recession

The Euro (EUR) slumped against the Pound (GBP) on Tuesday as data from Monday showed that the bloc’s largest economy saw its manufacturing sector stuck in recession.

October’s German manufacturing PMI revealed that new orders slumped for the thirteenth consecutive month, leaving the index at the second-lowest since June 2009.

Looking ahead to Wednesday, the single currency could extend its losses against the Pound following the release of the German services PMI.

The GBP/EUR exchange rate could rise if October’s PMI disappoints and falls further towards contraction, following the country’s manufacturing sector.

Pound US Dollar (GBP/USD) Exchange Rate Flat as US Services Grows at Slowest Rate in Over Three Years

The Pound US Dollar (GBP/USD) exchange rate was left flat on Tuesday afternoon after Markit revealed US service sector growth saw its slowest increase since February 2016.

However, the US Federal Reserve’s preferred PMI measure from the Institute for Supply Management (ISM) rose from September’s three year low of 52.6 to 54.7 in October which likely limited ‘Greenback’ losses.

Looking ahead, the US Dollar could be left under pressure following the release of the flash nonfarm productivity. If productivity slumps in the third quarter, it will likely weigh on USD.

Pound Canadian Dollar (GBP/CAD) Exchange Rate Muted as Canada’s Trade Deficit Narrowed

The Canadian Dollar (CAD) was left muted against the Pound (GBP) as Canada’s trade deficit narrowed as both imports and exports declined.

This comes after the Bank of Canada (BoC) warned that the country’s economy was not immune to the global trade tensions, including the US-China conflict which likely weighed on CAD.

Looking ahead to Wednesday, the ‘Loonie’ could edge higher against the Pound following the release of October’s Ivey PMI.

If the Ivey PMI claws its way out of contraction territory, it is likely to give the Canadian Dollar an upswing of support.

Pound Australian Dollar (GBP/AUD) Exchange Rate Falls as RBA Leave Rates Unchanged

The Pound Sterling Australian Dollar (GBP/AUD) exchange rate slumped on Tuesday after the Reserve Bank of Australia (RBA) left interest rates unchanged as expected.

The RBA Governor Philip Lowe noted that the main uncertainty the bank faces is the outlook for consumer spending. The bank also said it was prepared to ease policy further, however an upswing in risk appetite buoyed the ‘Aussie’.

Looking ahead, it is likely any further developments in US-China trade discussions will cause movement in the GBP/AUD exchange rate. If reports reveal a location for the US and China to sign the ‘Phase One’ deal, it could provide the ‘Aussie’ with a further upswing of support.

Pound New Zealand Dollar (GBP/NZD) Exchange Rate Left Flat despite US-China Trade Optimism

The Pound Sterling New Zealand Dollar (GBP/NZD) exchange rate was left muted despite an upswing in risk appetite.

US-China trade optimism rose as reports from the Financial Times revealed the US is considering dropping some of its tariffs on Chinese goods.

Looking ahead to this evening, the ‘Kiwi’ could be left under pressure following the release of New Zealand’s employment data. If unemployment rises higher than expected in the third quarter, it could cause GBP/NZD to edge higher.

As of Tuesday, 5th November 2019, the Pound Sterling currency rates mentioned within this news item were as follows:

GBP EUR exchange rate was 1.1632, GBP USD exchange rate was 1.2882, GBP AUD exchange rate was 1.8689, GBP NZD exchange rate was 2.0206, GBP CAD exchange rate was 1.6945, and GBP CNY exchange rate was 9.0296.
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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