Published: 17 Jan at 5 PM Tags: Euro, Dollar, Pound Sterling, America, UK, Eurozone, Australian Dollar, New Zealand Dollar, Canadian Dollar, Australia, New Zealand, USA, Canada,
Pound Sterling (GBP)
The Pound edged higher against most major currency rivals on Wednesday, despite a lack of supportive domestic data in recent sessions.
While investors were disappointed in Tuesdayâ€™s UK Consumer Price Index (CPI) report from December and this led to a drop in Bank of England (BoE) rate hike bets, the Pound instead benefitted from rising hopes for a â€˜soft Brexitâ€™.
Comments from EU officials including European Commission Leader Jean-Claude Juncker have seemingly taken a friendlier tone, adding to market hopes that UK-EU trade negotiations will go smoothly.
The Pound is unlikely to see a notable shift in movement until Friday, when Britainâ€™s December retail sales report will be published.
The Pound to Euro exchange rate fell on Wednesday, as the Pound benefitted from investors taking profit from the Euroâ€™s recent highs.
The Euro has seen strong performance in recent weeks, but due to fresh comments from European Central Bank (ECB) officials the shared currency has become less appealing ahead of next weekâ€™s ECB policy decision.
ECB officials including ConstÃ¢ncio and Nowotny expressed concern over the Euroâ€™s recent gains in strength, despite a lack of changes in the Eurozone economic outlook. This left investors less confident that the ECB was preparing to take a more hawkish tone in its monetary policy forward guidance.
Investors will likely be hesitant to buy the Euro as next weekâ€™s ECB decision approaches, which could help GBP/EUR to see stronger performance until next Thursday.
US Dollar (USD)
The Pound to US Dollar exchange rate hit a new post-referendum high on Wednesday afternoon, thanks to hopes for a â€˜soft Brexitâ€™ and continued broad weakness in US Dollar trade.
Despite some solid US factory data during Wednesdayâ€™s American session, the US Dollar remained weak due to the rising global growth outlook as well as market uncertainty about the US political outlook and the future of the North American Free Trade Agreement (NAFTA). US President Trump has threatened to pull out of the deal which some analysts say could cost the US thousands of jobs.
The US Dollar could be influenced on Thursday by US housing data, or by Fridayâ€™s Michigan consumer confidence survey from January. Failing that though, investors will be anticipating next weekâ€™s key US Gross Domestic Product (GDP) projections.
Australian Dollar (AUD)
The Pound to Australian Dollar exchange rate continued to trend within a tight range near the weekâ€™s opening levels on Wednesday, as it has done since Monday.
Wednesdayâ€™s Australian data, including November home loans and Westpacâ€™s January consumer confidence results, helped to support the Australian Dollar. Home loans beat -0.2% expectations and rose to 2.1%, while Westpacâ€™s consumer confidence index rose from 103.3 to 105.1. Despite this though, GBP/AUD movement remained limited as Sterling was boosted by â€˜soft Brexitâ€™ hopes.
The Australian Dollar is likely to react to Thursdayâ€™s highly anticipated Australian job market report from December.
The Pound to New Zealand Dollar exchange rate advanced on Tuesday and continued to trend above the weekâ€™s opening levels on Wednesday.
Demand for the New Zealand Dollar was weakened by Tuesdayâ€™s drop in NZIERâ€™s business confidence print â€“ which fell from 5% to -12%. The New Zealand Dollar also failed to benefit from the latest rise in prices of dairy, New Zealandâ€™s most lucrative commodity.
GBP/NZD could hold most of its gains until Friday, when Decemberâ€™s NZ business PMI will be published as well as Britainâ€™s December retail sales report.
Canadian Dollar (CAD)
The Pound to Canadian Dollar exchange rate jumped on Wednesday â€“ despite news that the Bank of Canada
(BOC) had been the first major central bank to hike interest rates in 2018.
As was expected by markets, the Bank of Canada hiked Canadaâ€™s interest rates to 1.25%. However, while the bank hinted that more interest rate hikes were on the way it expressed caution and concerns about the North American Free Trade Agreement (NAFTA), which US President Trump has threatened to pull the US out of.
As a result of the BOCâ€™s uncertainty the Canadian Dollar plunged, helping GBP/CAD to climb to its best levels in over a month. As NAFTA concerns persist the Canadian Dollar is unlikely to strengthen again in the coming days, so GBP/CAD could be on track to gain over a cent by the end of the week.
As of Wednesday, 17th January 2018, the Pound Sterling currency rates mentioned within this news item were as follows:
GBP EUR exchange rate was 1.1347, GBP USD exchange rate was 1.383, GBP AUD exchange rate was 1.7348, GBP NZD exchange rate was 1.9014, and GBP CAD exchange rate was 1.7202.