GBP: Pound Sterling (GBP) Pares Gains after UK GDP Data
The Pound climbed against most of the majors yesterday, riding the recent wave of interest rate hike speculation following a hawkish U-turn from Bank of England (BoE) Governor Mark Carney.
This morning however the Office for National Statistics released the Q1 GDP statistics, revealing that GDP growth for the first three months of 2017 was at 0.2%, weaker than 2016’s fourth quarter of 0.7% and indeed the weakest figure in a year.
Additionally, household incomes fell for the third consecutive quarter, revealing that Britons held onto the smallest proportion of their incomes than any other time on record and the services sector revealed very slight growth of 0.1% to 0.2%.
Sterling quickly pared some of its overnight gains against most of the majors as a result, as the increasing odds of a rate hike are negated somewhat by the slightly negative services sector data.
EUR: Euro (EUR) Stumbles Following Mixed CPI Figures
The Pound to Euro exchange rate has traded within a relatively narrow band lately. Yesterday saw the release of stronger than expected German CPI data, which boosted prospects for the Euro, meanwhile Sterling grew bullish as a number of BoE officials expressed hawkish sentiments.
This morning however the Euro pared some of its gains in anticipation to, and following the Eurozone CPI figures. Headline Eurozone inflation dropped for June, but the core measure grew. Core CPI excludes food, energy, alcohol and tobacco and is generally considered the less volatile reading. Today’s figure came in slightly higher than expected, at 1.2%, but the headline figure shrinking from 1.4% to 1.3% was enough to encourage many to sell the Euro.
USD: US Dollar (USD) Bearish Despite Positive GDP Growth
The US Dollar published some better than expected US gross domestic product (GDP) data yesterday. The first quarter GDP was originally forecast to remain stable at estimates of 1.2%, however it was revised to 1.4% due to growth in consumer spending (consumer spending makes up some two-thirds of US economic output).
Despite the positive GDP figures, the US Dollar struggled against Sterling, which was looking bullish in light of Mark Carney’s recent hawkish U-turn and the success of the Conservative party in passing the Queen’s Speech bill vote – events that sent ‘Cable’ to the highest levels it’s reached in a month.
The outlook for the US Dollar today remains somewhat bearish, but with this morning’s UK GDP figures disappointing some, the US Dollar could make some gains against the Pound – especially if today’s spate of US data releases come out better than expected.
CAD: Pound Stumbles against Canadian Dollar (CAD), Crude Oil Sees Sixth Consecutive Rise
Sterling initially strengthened against the Canadian Dollar yesterday following the success of the Conservative party in passing the Queen’s Speech bill and the recent hawkish sentiment changes from the Bank of England. As the day progressed, however, some of these gains were cut short due to bullish crude oil prices.
Crude oil, despite being in a slump, climbed for its sixth consecutive session as US production levels softened, helping the ‘Loonie’ hold its ground against a rising Sterling.
Today the somewhat negative UK GDP data has caused the Pound to stumble in this pairing. This could continue, especially if today’s Canadian GDP growth prints as expected at 3.4% for April, up from the 3.2% previous.
AUD: Iron Ore Bullish, Pound Australian Dollar (AUD) Trades within Narrow Band
Sterling saw some gains against the Australian Dollar yesterday, though these have since levelled as Sterling’s rally slowed and the Australian Dollar benefitted from an increasingly bullish iron ore.
Today’s positive Chinese PMI report is likely to encourage the Australian Dollar further, though with hawkish murmurings going on at many of the world’s central banks, many traders are selling the Australian Dollar in favour of their respective currencies, something that could put continued pressure on the ‘Aussie’ Dollar.
NZD: New Zealand Dollar (NZD) Propelled by Positive Chinese PMI
Sterling reached its highest level in three weeks against the New Zealand Dollar yesterday, as BoE rate hike bets propelled Sterling higher.
Today, however, Sterling shed its gains following the release of somewhat negative first quarter British GDP data and a positive Chinese PMI release of 51.7. As China is New Zealand’s largest trading partner the upbeat Chinese news was enough to shore up NZD.
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