The Pound to Dollar (GBP/USD) exchange rate jumped higher on the back of Boris Johnson’s accession to power yesterday, although at least some of these gains proved to be short-lived. A critical monetary policy announcement from the European Central Bank (ECB) today will provide direction for the Euro (GBPEUR), while the Pound locked in gains over the Australian Dollar (GBP/AUD) following a central bank commitment to keep interest rates low.
Pound Pushes Briefly Higher on Johnson Appointment
The British Pound US Dollar exchange rate (GBP/USD) found some support yesterday off the back of Boris Johnson’s appointment as Prime Minister, although gains proved to be measured with a foray above 1.2500 being rather short-lived. The fact there have been no surprises in this process has taken a degree of uncertainty off the table, but significant questions over how he can deliver Brexit while the EU is unwilling to offer any flexibility and also the risk of the government facing a motion of no confidence after the summer break means that any attempt at gains for Sterling could prove challenging.
Euro Direction to be Dictated by ECB Policy Call
Direction for the Pound Euro exchange rate (GBP/EUR) today is likely to be influenced heavily by the outcome of the European Central Bank’s monetary policy meeting. There’s little consensus as to exactly what action will be taken today, although with inflation expectations falling, it’s likely to be a case of either outright policy easing or otherwise some firm commitments over such action at the end of the summer. If a rate cut is delivered today then look for the Euro to lose ground, which in turn, could help lift GBP/EUR towards highs not seen in five weeks.
Why Did it Move? Pound Australian Dollar (GBP/AUD) Exchange Rate
The Pound Australian Dollar exchange rate (GBP/AUD) continues to push higher, following the release of disappointing economic data earlier in the week. Overnight, Reserve Bank of Australia (RBA) Governor Philip Lowe spoke, making a commitment to maintain low interest rates for the foreseeable future in a bid to stoke inflation. This news helped cement gains already seen by Sterling in the wake of Boris Johnson’s appointment as PM. Having traded as low as 1.7675 yesterday morning, the GBP/AUD cross now sits above 1.7900.