The Pound US Dollar exchange rate (GBP/USD) has been gaining since early last week. A whole host of factors have combined to provide support, including a resolute tone from the Bank of England (BoE) over interest rates, despite downgrading UK economic growth forecasts. Broad-based losses for the US Dollar after the Federal Reserve struck a more cautious note on the outlook for the US economy added further support for Cable, with the Pound now two-and-a-half cents up on last week’s lows.
Gains are continuing in Monday’s early trade, despite the weekend’s news that could disrupt the Conservative Party leadership campaign. Boris Johnson is under increasing pressure to explain a domestic dispute, while a small number of rogue Conservative MPs also appear ready to support a vote of no confidence in him, should he be put forward as Prime Minister next month.
Pound-Euro Exchange Rate Struggles for Direction
Sterling is trading broadly sideways against the Euro right now (GBP/EUR), although any improved clarity over Brexit may help provide some fresh direction here. However, that could still be some way off, with the Conservative Party leadership election needing to be resolved first before attention then moves to the October 31st Brexit deadline, and whether any further concessions will be seen from Brussels. Any glimmers of an accord would likely have the potential to see the Pound exchange rates strengthen as a result.
What’s Happening Today?
The German IFO Expectations Survey for June is due for publication this morning. Covering more than 7,000 enterprises across Europe’s largest economy, this print provides valuable insight. Expectations are for a modest decline from last month’s 95.3 to 94.6. Anything much below this could raise fresh concerns that the European Central Bank (ECB) isn’t doing sufficient work to fire the economy up, and could leave the Euro exchange rate to suffer as a result.
Why Did it Move? Pound to Australian Dollar (GBP/AUD)
The Australian Dollar gained a little ground against the British Pound (AUD/GBP) overnight after the Governor of the Reserve Bank of Australia (RBA) hinted that lower interest rates would enable more infrastructure investment by the government, which could help bolster the country’s economy. Sterling lost almost a full cent against the Aussie Dollar (GBP/AUD) overnight, although the situation was even more dramatic against the US Dollar. The AUD/USD exchange rate is now trading close to two-week highs.