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Please find below today's update which gives you an insight into the current market conditions, enabling you to keep informed and up to date on the latest currency movements.
Headlines
- Pound rises as BoE maintains status quo – Unanimous vote against cutting rates.
- GBP/EUR up on BoE statement – Eurozone CPI slides -0.2%.
- GBP/USD up 220 pips – As Fed outlook shift sends Dollar plunging.
- GBP/AUD rebounds from 14-month low – Sterling rallies vs. ‘Loonie’.
Sterling
The Pound increased in value against most of the majors yesterday as investors rushed to adjust their Bank of England rate hike bets after the central bank voted unanimously against cutting interest rates in March.
The BoE left rates on hold at 0.50% for the 84th consecutive month – that’s seven whole years of rock-bottom rates. This much was expected.
Given the recent market turmoil and the approaching EU referendum some investors had forecast a couple of votes to reduce rates further. But because this did not happen markets were wrong-footed and demand for Sterling increased as a result.
Euro
The Pound to Euro exchange rate rallied by around a cent yesterday as markets supported Sterling following the Bank of England’s unanimous decision to alter monetary policy. Although the debate coming into the New Year was ‘when will the BoE start hiking rates?’ the extent to which market confidence has slumped so far in 2016 means that a 9-0 vote against raising or reducing rates was seen as a hawkish outcome.
Across the Channel in the Eurozone inflation printed, as expected, in negative territory. The February CPI report showed that prices pressures declined -0.2% last month. The data weighed on the single currency but it was the BoE announcement that sent GBP/EUR rocketing higher by around 100 pips.
US Dollar
Euro
The Pound to Euro exchange rate rallied by around a cent yesterday as markets supported Sterling following the Bank of England’s unanimous decision to alter monetary policy. Although the debate coming into the New Year was ‘when will the BoE start hiking rates?’ the extent to which market confidence has slumped so far in 2016 means that a 9-0 vote against raising or reducing rates was seen as a hawkish outcome.
Across the Channel in the Eurozone inflation printed, as expected, in negative territory. The February CPI report showed that prices pressures declined -0.2% last month. The data weighed on the single currency but it was the BoE announcement that sent GBP/EUR rocketing higher by around 100 pips.
US Dollar
Sterling surged to a new monthly high against the US Dollar yesterday as investors continued to pour out of the ‘Greenback’ following the Federal Reserve’s amended policy outlook statement last night.
The sharp drop in 2016 rate hike expectations, which saw previous estimates of 100 basis points halved to 50 basis points, turbocharged risk markets and sent the US Dollar plunging across the board.
GBP/USD also took heart from the BoE announcement yesterday, as investors breathed a sigh of relief that policymakers did not try and take UK interest rates even lower.
The sharp drop in 2016 rate hike expectations, which saw previous estimates of 100 basis points halved to 50 basis points, turbocharged risk markets and sent the US Dollar plunging across the board.
GBP/USD also took heart from the BoE announcement yesterday, as investors breathed a sigh of relief that policymakers did not try and take UK interest rates even lower.
Sterling’s 220 pip appreciation against the ‘Greenback’ marked its biggest one-day gain since October 2009.
Canadian Dollar
Canadian Dollar
Having declined by around two cents on Wednesday as UK budget concerns and increased risk appetite following the Fed announcement damaged GBP/CAD, the Pound managed to claw back its losses yesterday thanks to the very mildly hawkish BoE statement.
US Crude oil did hit a three-month high yesterday but the rallying commodity did not translate into gains for the risk-sensitive ‘Loonie’ ahead of this afternoon’s CPI report, which is tipped to show that inflation slowed from 2.0% to 1.5% last month.
Australian Dollar
Australian Dollar
Sterling recovered from an 18-month low against the Australian Dollar yesterday, rebounding three cents after crashing through a number of resistance levels.
It was the Fed’s dovish statement and a better-than-expected unemployment report that sent GBP/AUD lower but demand for Sterling increased dramatically following the BoE minutes report. The ‘Aussie’ also had to weather remarks from Reserve Bank of Australia assistant governor Guy Debelle insisted that a lower currency would improve inflation prospects ad boost economic activity.
New Zealand Dollar
New Zealand Dollar
It was a similar story for the Pound against the New Zealand Dollar as it was in the other Sterling / commodity currency crosses. GBP/NZD tumbled sharply on Wednesday before rallying strongly on Thursday.
Data Released
12:30 CAD Retail Sales (MoM) (JAN) Medium 0.6%
12:30 CAD Consumer Price Index (YoY) (FEB) High 1.5%
14:00 USD U. of Michigan Confidence (M
12:30 CAD Consumer Price Index (YoY) (FEB) High 1.5%
14:00 USD U. of Michigan Confidence (M
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