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Pound Sterling Exchange Rate Volatility Seen ahead of BoE Interest Rate Decision

Published: 30 Jul at 5 PM Tags: Euro, Dollar, Pound Sterling, America, UK, Eurozone, Australian Dollar, New Zealand Dollar, Canadian Dollar, Australia, New Zealand, USA, Canada, Germany,

Pound Sterling (GBP)

The Pound has advanced against the US Dollar and a number of other peers today, but has conversely fallen against the stronger Euro.

This mixed performance comes as GBP traders consider the odds of a Bank of England (BoE) interest rate hike when policymakers meet on Thursday.

Some economists put the odds of a rate hike this week above 90%, which is part of the reason that the Pound has been in such high demand in certain pairings.

Before the late-week BoE meeting, the Pound could slip back in value when Tuesday’s GfK consumer confidence stats come out.

These are predicted to show a negative reprint in July, which could unsettle GBP traders and cause Pound Sterling exchange rate losses.

Euro (EUR)

Following the release of mixed German inflation and Eurozone confidence data today, the Euro has appreciated against the Pound and US Dollar but made losses elsewhere.

This overall positive performance comes despite the fact that German inflation didn’t rise as much as forecast and the confidence stats proved mixed overall.

The Euro’s gains today are more likely down to a weaker US Dollar and background hopes for an early-2019 European Central Bank (ECB) interest rate hike.

The next Eurozone data to watch out for will be Tuesday’s Eurozone unemployment rate, GDP and inflation rate figures.

Higher inflation, slowing quarterly GDP growth and a forecast-matching drop in the jobless rate could ultimately support the Euro tomorrow morning.

US Dollar (USD)

A lack of US economic confidence has meant that the US Dollar has fallen against most of its currency peers today, enabling gains for risk-based peers.

Today’s Federal Reserve Bank of Dallas manufacturing index has proven disappointing, suggesting a slowdown in activity with a shift from 36.5 points to 32.3 in July.

The US Dollar could recover on Tuesday afternoon, if a personal spending measure for June shows an as-forecast rise from 0.2% to 0.4%.

Australian Dollar (AUD)

The Australian Dollar has risen against the struggling US Dollar but fallen against the Euro and Pound today.

There has been limited AU economic news so far – the main source of AUD losses has been a warning that Australia is not investing enough in research and development to compete with other nations.

The Australian Dollar could make more unified gains on Tuesday morning, if building permits in June are reported to have risen.

A higher number of permits might mean eventual growth in the AU construction sector, which would be supportive of Australian economic growth.

New Zealand Dollar (NZD)

Like the Australian Dollar, the New Zealand Dollar has appreciated today thanks to the recent devaluation of the US Dollar.

In another similarity, there hasn’t been much high-impact NZ data to provide domestic influence on the New Zealand Dollar.

The NZD may post further gains after Tuesday’s early ANZ business confidence reading comes out; this could raise NZD trader optimism if it points to improving sentiment levels.

Canadian Dollar (CAD)

Higher crude oil prices have supported the Canadian Dollar today, leading to gains against the Pound and US Dollar and narrow trading against the Euro.

The CAD could greatly expand its current gains on Tuesday afternoon, if May’s GDP reading matches forecasts and shows growth from 0.1% to 0.4%.
As of Monday, 30th July 2018, the Pound Sterling currency rates mentioned within this news item were as follows:

GBP EUR exchange rate was 1.1218, GBP USD exchange rate was 1.3134, GBP AUD exchange rate was 1.7725, GBP NZD exchange rate was 1.924, and GBP CAD exchange rate was 1.7114.
Patrick James About Author: (289 Posts)Patrick completed his economics degree just as the global financial crisis struck in 2008. In the intervening years Patrick has made his mark, climbing to a prominent position within a large financial services provider. As part of his role Patrick uses his expertise to advise companies of the best ways to safeguard against currency risk.

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