GBP: Pound Sterling Bolstered by Robust UK Data
The Pound Sterling finished the week on positive note, rising against the majors on Friday after a slew of strong UK data prints.
Amongst them was the UK’s July balance of trade figure, which beat expectations that it would widen by narrowing to £-2.87B, down from £-2.91B in June.
Whilst this figure wasn’t particularly significant, the fact that the deficit shrunk rather than widened as forecast was enough to drive some demand back to Sterling.
The Office for National Statistics also reported that industrial and manufacturing production in the UK demonstrated a rise, with month-on-month manufacturing jumping 0.5% in July and industrial production rising by 0.2%.
The biggest influence, however, was the National Institute of Economic and Social Research’s (NIESR) UK GDP prediction of an uptick from 0.2% to 0.4% in the third quarter, an event that cemented Sterling’s gains heading into the weekend.
Big data for the Pound this week includes tomorrow’s UK inflation rate and retail price index figures, with the year-on-year inflation rate in August expected to jump from 2.6% to 2.8%.
GBP EUR: Pound Euro Soars on Strong UK GDP Estimate
The Pound soared against the Euro on Friday as UK data exceeded forecasts and Eurozone data proved somewhat disappointing.
Germany’s trade surplus was demonstrated to have narrowed in July from €22.3 billion to €19.5 billion, with export growth continually outweighed by import growth.
Some economists have suggested that the strength of the Euro has diminished Germany’s export sector, with high prices proving problematic in maintaining competitively.
Traders will be watching and assessing this Wednesday’s German inflation figures and Eurozone employment figures, with both releases liable to cause volatility for GBP EUR.
GBP USD: Pound US Dollar Finishes Week On top as America Prepares for Hurricane Irma
The US Dollar has suffered a range of ailments as of late, with Storms Harvey and Irma causing immense damage while the geopolitical crisis with North Korea rumbles on.
Traders often favour the US Dollar as a safe-haven currency in times of geopolitical crisis, but with the storms continuing to rage investors have moved to currencies like the Swiss Franc (CHF) and the Japanese Yen (JPY), thus leaving the ‘Greenback’ vulnerable to Sterling’s climb.
Many traders have been worried that the long-mentioned tax and economic reform that US President Donald Trump discussed will remain delayed, though Trump recently addressed this at a cabinet meeting at Camp David, stating:
“I think now with what’s happened with the hurricane, I‘m going to ask for a speedup. I wanted a speedup anyway, but now we need it even more so’.
Trump continues to urge congress to not wait until the end of September for tax legislation, though whether this will materialise remains to be seen.
Keep an eye out for Thursday’s US inflation figures and Friday’s University of Michigan Confidence assessment (which provides a reading of consumer confidence on things like personal finances, business conditions and purchasing power). Both releases could swing GBP USD back into the ‘Greenback’s’ favour.
GBP CAD: Canadian Employment Fails to Prevent GBP Rally
The Pound Canadian Dollar exchange rate climbed on Friday as Canada’s labour market data failed to impress.
Whilst some 22,000 people were demonstrated to have entered the workforce in August (smashing the expectation of 15,000), this was mostly due to a surge in part-time work. Indeed, the number of people in full-time employment actually declined by 88,100 in August, following a jump of 35,100 in July.
Thus the ‘Loonie’ was unable to prevent the Pound’s data driven surge.
GBP AUD: Pound Surges against ‘Aussie’ on Sturdy UK Data
Whilst the ‘Aussie’ was indeed bolstered by its US counterpart’s weakness, it was not enough to prevent Sterling from taking the lead as a result of Friday’s positive UK data releases.
The big data to watch out for this week for the GBP AUD pairing will be Australia’s Westpac consumer confidence index on Wednesday and employment figures on Thursday. America’s inflation figures will also be notable, as they could swing GBP AUD either way by strengthening or weakening the ‘Aussie’ Dollar.
GBP NZD: Pound New Zealand Dollar Claws Back Losses
Friday’s robust manufacturing and industrial production data prints allowed Sterling to climb against the ‘Kiwi’ Dollar, with NZD remaining weakened as a result of ongoing political turbulence regarding its election.
The data calendar for the ‘Kiwi’ is sparse this week, though Thursday’s New Zealand manufacturing PMI may prove significant, with a rise forecast from 55.4, to 55.9.