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BoE Fails to Boost Pound (GBP/EUR, GBP/USD), Australian Dollar Sinks

August 2, 2019 8:48 am | Modified August 2, 2019 8:48 am
AUD, Central Banks, EUR, GBP, USD | BY Charlie Murray

The British Pound US Dollar (GBP/USD) exchange rate continues to languish around recent lows with more gloomy assessments from the Bank of England (BoE) keeping a lid on gains. Economic data from the Eurozone today may provide some support for Sterling against the common currency (GBP/EUR), while Donald Trump’s latest tariff salvo has knocked the Australian Dollar, too.

Bank of England Unable to Bolster Sterling Exchange Rate

Fresh multi-year lows were seen for the British Pound US Dollar exchange rate (GBP/USD) yesterday in the wake of comments from Bank of England Governor Mark Carney. Growth projections for the UK have been lowered and the bank believes the country now faces a one in three risk of recession even if a Brexit deal can be brokered. One positive message was news that BoE intervention to stabilise the markets in the event of no-deal in October was seen as being highly unlikely, but Sterling remains very much under pressure. Today’s US employment and wage data could apply further pressure to the Pound after the Federal Reserve underwhelmed many earlier in the week. If wage inflation remains robust then this will add weight to the idea that the Fed has already done enough and could drive further US Dollar buying as a result.

Euro Exchange Rate Forecast: Eurozone Retail Sales in Focus

The Pound Euro exchange rate (GBP/EUR) continues to hold close to two-year lows, with yesterday’s Bank of England comments doing little to provide support. The coming hours could, however, see some fresh weakness for the common currency with both Eurozone Retail Sales and the Producer Price Index readings for June due to be released. Again, both of these prints have the ability to illustrate a lack of inflationary pressure, something which the European Central Bank needs to avoid and would, in turn, add weight to calls for more aggressive stimulus measures to be deployed after the summer break.

Why Did it Move? Pound to Australian Dollar (GBP/AUD) Exchange Rate

The Pound has seen some exaggerated volatility against the Australian Dollar in the last few hours. The move stems predominantly from a decision by the US to apply a further round of tariffs on Chinese imports from next month. With China being Australia’s biggest trading partner, anything that risks further slowing growth in the world’s second largest economy will be felt across Australia, too. From lows of 1.7640 yesterday morning, GBP/AUD traded as high as 1.7880 last night. The cross currently sits around 1.7770

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