Home » GBP » Daily Update: Pound (GBP) Bearish before Tomorrow’s Retail Sales and ECB Meeting

Daily Update: Pound (GBP) Bearish before Tomorrow’s Retail Sales and ECB Meeting

Live Currency Exchange Rates

GBP: Pound Levels Out on Quiet Data Calendar

Sterling nosedived against the majors yesterday as UK inflation printed weaker than traders expected.

Today is a quiet day for the UK data calendar, something that has perhaps steadied the Pound’s descent.

On Thursday the UK June retail sale figures will be published. Should these impress then Sterling may well find some pressure eased, as it would illustrate that the UK economy has been more resilient than initially anticipated, despite the pay squeeze. Conversely, a drop would realise fears and further negate the possibility of hawkish sentiment from the Bank of England.

GBP/EUR: Pound Euro Stable, Markets Prepare for Tomorrow’s ECB Meeting

The Pound began to claw back some of its losses against the Euro this morning after yesterday’s significant dip of over a cent.

The ECB’s monetary policy meeting is tomorrow, and though most economists do not expect the ECB to make changes, there is still speculation that the ECB could provide some insight into its future plans, particularly regarding the tapering of its bond-buying program.

Mario Draghi, President of the ECB recently asserted:

‘As the economy continues to recover, a constant policy stance will become more accommodative and the central bank can accompany the recovery by adjusting the parameters of its policy instruments – not in order to tighten its policy stance but to keep it broadly unchanged.’

Indeed, whilst economic growth within the Eurozone remains strong and sentiment remains high, inflation levels are nowhere near the ECB’s target – they even declined from 1.4% to 1.3% in June. In such a climate the ECB may refrain from talking about tapering stimulus until later in the year.

GBP/USD: Pound US Dollar Remains within Narrow Band

‘Cable’ dropped yesterday, declining some -20 pips after the slide in UK inflation reduced BoE interest rate hike bets.

The ‘Greenback’ itself was unable to take full advantage of Sterling’s stumble, however, due to American sentiment being damaged by another political roadblock for the Republicans. President Donald Trump’s attempt to repeal ‘Obama-care’ again ran aground when two Republican senators did not show support for the proposal.

Understandably, this news weighed on the ‘Greenback’ as investors perceived it as further evidence that Trump’s ability to push policy and engage in tax reform might be limited.

Today will see the release of the US housing starts, building permits and crude oil inventory data, with building permits and housing starts both forecast to have demonstrated growth. Should this materialise then the US Dollar could see some minor gains.

GBP/CAD: Pound to Canadian Dollar Exchange Rate Settles Half a Cent Lower

The Pound to Canadian Dollar exchange rate lost half a cent yesterday after traders sold Sterling in response to the morning’s surprise drop in UK inflation.

Oil prices logged some minor gains on Wednesday before the release of the US government’s oil inventories data.

The American Petroleum Institute projected yesterday that US crude stocks had grown significantly in recent weeks and, should this estimate prove accurate, then the commodity-correlated Canadian Dollar will likely come under pressure.

GBP/AUD: Pound Australian Dollar Exchange Rate Plummets to 3-Month Low

Sterling plunged to a three-month low against the Australian Dollar yesterday as markets reacted to a perfect storm consisting of positive minutes from the Reserve Bank of Australia’s (RBA) meeting, strong Chinese GDP, and poor UK inflation figures.

The RBA stated that neutral interest rates should be around the 3.50% level, far higher than the current rate of 1.50%. The ‘Aussie’ Dollar jumped following said remarks, as they were perceived as a warning to borrowers that policy will soon be tightened.

GBP/NZD: Pound to New Zealand Dollar Fluctuates after Disappointing NZ Inflation Figures

The New Zealand Dollar to Pound exchange rate initially dropped yesterday after it was revealed that the antipodean nation’s inflation levels had surprisingly fallen.

This quickly changed, however, when the UK’s inflation levels were also revealed to have dropped and New Zealand’s dairy prices (dairy being their most lucrative export) increased at their fortnightly auction.

Today the Pound remains somewhat bearish against the ‘Kiwi’, as traders await tomorrow’s ECB sentiment.

Comments are closed.