Pound Sterling (GBP) Trends Higher Today ahead of UK GDP
While investors are not especially confident ahead of the UK’s latest GDP figures this morning Pound Sterling (GBP) has been regaining some ground against rivals. As sentiment calms somewhat the Pound Sterling to US Dollar (GBP/USD) exchange rate was trending in the region of 1.3940, while the Pound Sterling to Canadian Dollar (GBP/CAD) pairing was making gains around 1.9113.
In spite of the latest US Consumer Confidence measure falling further than expected the Pound Sterling to US Dollar (GBP/USD) exchange rate has slumped to a seven-year low today.
Pound Sterling (GBP) Exchange Rate Extends Downtrend as ‘Brexit’ Debate Continues
‘Brexit’ uncertainty looks set to keep driving Pound Sterling (GBP) lower this week, as debate over the proposed reforms and the UK’s future in the European Union intensifies. Justice Secretary Michael Gove today claimed that the agreed deal between European leaders is not legally binding in its current form, a claim that has since been countered by the Attorney General. However, as the odds of a ‘Leave’ campaign victory have edged higher since the weekend the prospect of a potential ‘Brexit’ is likely to weigh heavily on the Pound and the UK economy in the coming months.
Tomorrow’s fourth quarter UK GDP report could soften Sterling further, as pundits expect to see the earlier estimate revised downwards from 2.1% to 1.9%. With ‘Brexit’ concerns predicted to stunt economic growth ahead of the June referendum the Pound could continue to retreat against rivals on the back of a weaker showing.
Oil Price Volatility Fails to Weigh on Canadian Dollar (CAD) Today
While oil prices have fallen off their weekly highs in the wake of discouraging commentary from Iranian and Saudi officials, the Canadian Dollar (CAD) has remained on an uptrend against many of the majors today. Brent crude has sunk back towards $32 after the Saudi Oil Minister repeated earlier iterations that OPEC would not be engaging in an oil production cut, prompting investors to return to a bearish attitude as the global supply glut continues to grow.
Although oil price volatility is likely to encourage the Bank of Canada (BOC) to consider making an interest rate cut in the near future the ‘Loonie’ has nevertheless taken heart from recent weakness in US data. Lower odds of a Fed rate hike have shored up the appeal of the higher-risk Canadian Dollar, removing some of the pressure from the BOC to act imminently.
Pound Sterling to US Dollar (GBP/USD) Exchange Rate Plunges to Seven-Year Low Despite Weaker US Confidence
Yesterday’s US Consumer Confidence reading for February proved decidedly weaker than traders had anticipated, clocking in at 92.2 rather than the forecast 97.3 to suggest that sentiment within the world’s largest economy is faltering. This was accompanied by an unexpected contraction in the Richmond Fed Manufacturing Index, which slipped from 2 to -4 in February as domestic conditions continued to soften. However, this has failed to particularly weigh on the US Dollar (USD) in spite of speculation that the Federal Open Market Committee (FOMC) will be prompted to hold off on further interest rate hikes for some time yet.
This afternoon’s US Services PMI could push the US Dollar to Pound Sterling (USD/GBP) exchange rate higher, if the sector defies the wider trend and continues to demonstrate signs of growth.
Current GBP, CAD, USD Exchange Rates
At the time of writing, the Pound Sterling to Canadian Dollar (GBP/CAD) exchange rate was slumped at 1.9219, while the Pound Sterling to US Dollar (GBP/USD) pairing was trending lower around 1.3889. Meanwhile, the Canadian Dollar to US Dollar (CAD/USD) exchange rate was on a downtrend in the region of 0.7222.