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Pound (GBP) Benefits from Brexit ‘Resilient’ Stance from the Bank of England

Published: 11 Jul at 5 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)

The Pound (GBP) rose against many of its competitors following the Bank of England’s (BoE) financial stability report today.

The BoE emphasised its resilience in response to a possible chaotic, saying in its statement that it is ‘prepared for Brexit and trade war fall-out’.

Mark Carney, the Governor of the BoE, also said that UK businesses were becoming increasing well-prepared for the Brexit scenario, further easing Brexit fears.

This mood of resilience from the UK central bank has provided some uplift for UK market sentiment.

US Dollar (USD)

The US Dollar (USD) fell following yesterday’s testimony from Fed Chairman Jerome Powell who appeared to confirm fears that the US would cut it interest rates as early as this month.

Today’s second testimony from Mr Powell only increased rate cut fears.

The Publication of the US inflation data, which improved above consensus in June by 2.1%, failed to boost the ‘Greenback’.

Market analysts, however, have deemed these figures unlikely to prevent the Fed from cutting its interest rates.

Euro (EUR)

The Euro (EUR) failed to benefit from the year-on-year German inflation figures for June, which exceeded forecasts and rose from 1.3% to 1.5%.

The Eurozone’s manufacturing and industrial woes, however, have continued to dampen confidence in the economy.

Rate cut fears from the European Central Bank (ECB) are therefore rising, holding back the single currencies gains today.

Australian Dollar (AUD)

The Australian Dollar (AUD) steadied against the Pound today following the publication of the Australian home loans figures for May, which stabilised at 0% – exceeding expectations.

However analysts at Westpac added:

Australia’s housing market remains a hot topic but there should be limited interest in May housing finance approvals given that the month includes a surprise federal election result where tax breaks on investment housing were proposed and of course pre-dates two RBA rate cuts.’

New Zealand Dollar (NZD)

The New Zealand Dollar (NZD) remained rangebound against Sterling today following last night’s publication of the NZ electronic card retail sales figures for June.

These fell below the consensus increase of 0.7% to 0.0%.

‘Kiwi’ traders will however be waiting for tonight’s printing of the business PMI figures for June, which are expected to improve.

Canadian Dollar (CAD)

The Canadian Dollar (CAD) fell against the Pound following the dovish forecasts from the US Federal Reserve.

As the Canadian economy is closely tied with that of the US’s, this has raised concern for the health of the economy in the short-term.

US-China trade tensions and global growth are remaining in focus for ‘Loonie’ investors.

As of Thursday, 11th July 2019, the Pound Sterling currency rates mentioned within this news item were as follows:

GBP EUR exchange rate was 1.1131, GBP USD exchange rate was 1.253, GBP AUD exchange rate was 1.7968, GBP NZD exchange rate was 1.8804, GBP CAD exchange rate was 1.6373, and GBP CNY exchange rate was 8.6085.
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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