The Pound was trading higher against the Euro (GBP/EUR), Canadian Dollar (GBP/CAD), US Dollar (GBP/USD), and New Zealand Dollar (GBP/NZD) at the start of Tuesday’s European session, while trending in a tight range against the Australian Dollar (GBP/AUD). It’s expected the Pound Sterling exchange rate will experience some movement today as highly influential UK inflation data is scheduled for release. If it achieves the 3.0% annual figure economists have forecast, it’s likely expectations for a Bank of England (BoE) interest rate increase will heighten, and bolster the GBP exchange rate.
Canadian Dollar – Canadian Inflation Ahead
There are a few events that could move the Loonie this week, but the main one will come on Friday when Canada releases its own Consumer Price Index (CPI). Inflation is expected to jump from 1.4% to 1.7% on the year in September, and if it does, it is likely markets will see some CAD exchange rate strength. A positive Canadian inflation reading would boost expectations that the Bank of Canada (BoC) will increase interest rates once more this year following two surprise adjustments higher.
Yesterday saw oil prices rise amid Iraq tensions, which could bode well for the Canadian Dollar as it usually traces the price of black gold. Brent Crude rose 1.2% to reach $57.80 per barrel.
New Zealand Dollar – Kiwi Jumps Briefly to Two-Week High
Overnight the New Zealand Dollar managed to hit a two-week high, albeit briefly. The Kiwi was given reason to rise when New Zealand inflation data printed more favourably than forecasts from the Reserve Bank of New Zealand (RBNZ) had expected, in the third quarter. The New Zealand Dollar climbed by 0.4% against the US Dollar to reach US$0.7217 after the ecostats showed that inflation picked up by 0.5% in the third quarter. The news was received positively after a flat reading from the quarter before. Annually, the CPI came in at 1.9%, bypassing forecasts for 1.8%. The Kiwi has recently been pressured lower following an uncertain election.
Australian Dollar – Chinese GDP Ahead
Investors in the Australian Dollar are gearing up for Thursday’s slew of Aussie data, including Employment Change and Unemployment Rate numbers. In addition, Australia’s largest trading partner, China, will release its latest Gross Domestic Product (GDP) figures which will detail how the Chinese economy has performed in quarter three. Positive numbers from China can be a good influence on the AUD exchange rate as the two economies share such a tight trading bond.
US Dollar – Who will be the next Fed Chair?
Disappointing US inflation data did little to buoy the US Dollar last week. The lacklustre figures caused the US Dollar to slip to its lowest level in over two weeks, and with no major releases out on Monday, the US Dollar had little to influence it. However, the US Dollar was offered some strength after reports came in that US President Donald Trump had been impressed by John Taylor at an interview for the position of Federal Reserve Chair. Taylor would likely be a more hawkish central bank Chief and so markets supported the Buck.
Euro – Time for a EUR/USD correction?
The Euro is the best-performing G10 major this year, but is it time the momentum of its rally slows? Strategists at UBS suggest that the Single Currency is residing above its short-term fair value versus the US Dollar (EUR/USD), despite its pace of advance slowing in the past month. Markets have been building US growth and interest rate expectations into the Dollar’s value, creating less room for the Euro to gain.
In a note to clients, head of macro and financial markets research at ABN Amro Bank NV, Nick Kounis, commented:
‘Sooner or later, investors will probably take profit on a part of their Euro longs resulting in a sizeable Euro correction, not a trend reversal.’
Pound – Further GBP Rallies Ahead?
The Pound will certainly be in for an interesting day today as Bank of England Governor Mark Carney is due to appear before the Parliament Treasury Select Committee today and investors in Sterling will be paying attention to any mention of interest rate increases. A hawkish tone from the central bank Chief could enable the Pound to rally against the euro (GBP/EUR), US Dollar (GBP/USD) and other currencies.
ING bank analyst Viraj Patel commented:
‘After a few weeks of highly charged political focus, we expect the narrative for GBP to slowly shift towards the November “Super Thursday” Bank of England meeting. Any hawkish signals could steepen the UK rate curve and we think GBP/USD at 1.35 is a strong possibility around the November BoE meeting.’
The GBP/CAD exchange rate is trending in the region of: 1.6646
The GBP/USD exchange rate is trading at levels of: 1.3282
The GBP/AUD exchange rate is residing in the region of: 1.6904
The GBP/NZD exchange rate is trading in the vicinity of: 1.8497
The GBP/EUR exchange rate is trending at levels of: 1.1277