Nicholas Ebisch, FX Analyst
The US dollar was the big star during yesterday’s trading, as the world’s most widely traded currency appreciated across the board, driving the dollar index to a 3-week high. The Fed minutes released Wednesday evening had a delayed effect for dollar appreciation, and the market is now interpreting the news to mean that there could possibly be a rate rise in June, which is a fact that was less clear during the Fed meeting and press conference a few weeks ago. Today, there is UK Manufacturing Production m/m figures out this morning, and Canadian employment data out this afternoon.
GBP/EUR: Currently trading at 1.3825
The MPC voted to keep the UK base rate at 0.50% yesterday. This came as no real surprise with inflation still around zero, with the risk of it falling into negative territory in the near future. This meant that Sterling dropped off by around 50 points in the morning. Sterling managed to regain some ground in the afternoon on the back of the news that Greece had met its first debt repayment to the IMF, but they would be unable to meet further obligations without further financial support from the European Union, which is not a guarantee.
GBP/EUR closed at 1.3805
The prominent piece of data being released today is the Manufacturing production figures for the UK (9:30), predicted to turn positive after a negative release last month. Strong figures from this release could see Sterling gains continue from yesterday afternoon.
GBP/USD: Currently trading at 1.4691
This rate has fallen over 1% in the last 24 hours, as the Federal Reserve meeting minutes released Wednesday evening are still having an effect on the currency pairing. Today’s UK data may help to provide support for sterling, as manufacturing data in the UK has been positive lately, but we may be looking at a new trading range of between 1.45 and 1.48 going forward.
EUR/USD: Currently trading at 1.0626
Yesterday saw weakness for the euro as the pairing dropped below the 1.07 mark. This came about following better than forecast US unemployment claims and ongoing concern over Greece, with a 5 working day deadline set for the Greeks to come up with a revised list of reforms to secure a deal on its next bailout.
There are no major announcements for the pairing today, so we expect to see a fairly quiet day with perhaps further euro weakness and dollar strength as the market continues to digest Wednesday’s FOMC minutes.
GBP/AUD: Currently trading at 1.9125
With the UK trade balance deficit unexpectedly widening yesterday morning, we saw sterling weaken across the board which saw over a cent wiped off the GBP/AUD rate. This downward trend continued throughout the course of the day falling to just below the 1.91 mark.
We could see some of these losses reversed today with UK manufacturing production set to improve on a monthly basis.
GBP/NZD: Currently trading at 1.9450
Some poor Home Loans data out from the New Zealands antipodean neighbour earlier on this morning has slightly dented confidence in the kiwi dollar, with the pound having taken back some of yesterday’s losses.
We head into the weekend with manufacturing data from the UK still to come. This figure will dictate the price today and over the weekend before New Zealand’s Business Confidence data on Monday.
GBP/CAD: Currently trading at 1.8533
Canadian building permits came in lower than predicted yesterday, edging down 0.9 per cent from January. This news had little impact as the loonie went on to close the day higher.
Today’s busy calendar brings us manufacturing production data from the UK in the morning, before Canadian employment data is released in the early afternoon. Analysts are predicting growth in manufacturing, which could give sterling an early boost. Investors will be awaiting Canadian employment change data, in anticipation of an increase. If the change is once again positive the loonie will be handed momentum.
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