The Pound remained in a tight range against both the Euro (GBP/EUR) and US Dollar (GBP/USD) exchange rates on Thursday morning, while falling against the recovering Turkish Lira (GBP/TRY) and climbing against the Japanese Yen (GBP/JPY).
Trump’s Trade War Causes Currency Market Investors to Tread Carefully
Trade war worries continue to ripple through the market as US President Donald Trump’s threat for tariffs on $200bn of Chinese goods continued to throw investors. There are plenty of businesses and institutions speaking out over the impact of a trade war, such as the South Korean Trade Ministry and South Korean car manufacturer Hyundai.
Hyundai which has bases in China, India, Russia, Turkey, Brazil, the Czech Republic, South Korea and the US warned:
‘If South Koren car exports to the US get blocked and hurt sales, the US factory in Alabama that went into operation in May 2005 could be the first one to be shut down, putting some 20,000 American workers at risk of layoffs.’
It seems there’s a mixed consensus on how trade wars might impact the global economy, but there’s plenty of concerns that jobs and economic growth could be hit. South Korea suggests that there will be pros and cons to the situation. Deputy Minister for Trade Kang Sung-chun said:
‘The impact will be mixed. There will be both positive and negative effects. Some Korean exports could replace Chinese goods to be slapped with tariffs for example.’
Investors Digest BoE Stability Survey, US Consumer Price Inflation
Meanwhile, the final German Consumer Price Index (CPI) printed in line with forecasts at 2.1% in June. Investors in the Euro exchange rate are now waiting for the latest Eurozone Industrial Production figure for May, forecast to rise to 2.3% from 1.7% on the year.
In the UK, the Bank of England released it’s latest Credit Conditions and Bank Liabilities surveys which markets will be digesting throughout the day. Other important events today will be the latest US Consumer Price Index out this afternoon.
In other news, the Turkish Lira experienced a big sell-off yesterday after President Recep Tayyip Erdogan announced his new Cabinet and forecast a decline in interest rates. He said:
‘In the period ahead I believe that we will see that interest rates will also fall.’
The Lira slumped versus the US Dollar, with the USD/TRY currency pair hitting a historic high of 4.9743.
Meanwhile, the Japanese Yen slipped lower after a mixed bag of domestic data. Investors will be looking towards Friday’s Japanese Industrial Production ecostats which could give the safe-haven currency some opportunity to move.
The Pound Sterling to Japanese Yen (GBP/JPY) exchange rate is presently 0.38% higher, trending in the region of 148.457. The Pound to Turkish Lira (GBP/TRY) exchange rate is trading around -1.26% lower, at levels of 6.3803. The Pound to US Dollar (GBP/USD) exchange rate is trending at levels of 1.3216. The Pound to Euro (GBP/EUR) exchange rate is trading at 1.1310.