Edward Knox, FX Analyst
Data from the UK this week has so far been very thin on the ground, and today brings the first serious release in the form of the Monetary Policy Committee’s Official Bank Rate Votes. Of course as we stand it is highly improbable that any member of the MPC will see fit to raise interest rates but traders will be eyeing the result closely and any sign of a policy member voting for an interest rate hike will see the pound backed. We will have to wait until tomorrow for any further scheduled high impact data so the currency markets are likely to take their lead today on any developments on the markets main focus which is the Greek debt saga.
GBP/EUR: Currently trading at 1.3894
Sterling rallied against the euro in the morning, while the afternoon session saw the euro recover some ground. The main data release affecting the pairing was the results of the German ZEW Economic Sentiment survey, lower than forecast at 53.3, and of the overall ZEW Economic sentiment, higher than forecast at 64.8.
This morning sees the results of the MPC votes. The rest of the day looks fairly quiet for UK and euro data, so fluctuations will most likely stem from ongoing uncertainties about Greece’s situation and the upcoming UK election. Looking ahead to the morning, France and Germany will both release Flash Manufacturing PMI, both forecasted to increase, which may give the euro room to make further gains against the pound in the morning.
GBP/USD: Currently trading at 1.4937
With no major UK or US data out yesterday, the pound made some gains against a weakening dollar over the course of the day, with the rate increasing nearly a cent in the early afternoon before settling around 1.493 overnight.
This morning sees the result of the MPC Official Bank Rate Votes and the MPC Asset Purchase Facility Votes, both expected to remain at 0-0-9 in favour of holding rates. The US announces existing home sales this afternoon, forecast to increase to 5.04M, and Crude Oil inventories, forecasted to increase to 2.7M. Sterling may continue to strengthen against the dollar in the morning, and the US’s afternoon data may give the dollar a chance to regain some ground.
EUR/USD: Currently trading at 1.0751
The ZEW German economic sentiment survey underperformed yesterday, failing to relieve the shared currency. Euro gains were seen in the afternoon, however, partly due to more optimistic outlooks of a Greece-related deal being reached by the end of April.
Another quiet day awaits us today, with the potential of existing home sale figures and crude oil inventories from the US later on in the afternoon causing a stir in the pairing should they fall out of line with expectations.
GBP/AUD: Currently trading at 1.9210
In the overnight session, the Aussie gained against the pound following the release of better than forecast AUD CPI data last night sparking an imminent policy change by the RBA to hold off a rate cut. The news saw the rate fall to 1.922 before meeting resistance this morning.
With a quiet calendar today, the focus turns to the political risks associated with the general election. With the likelihood of a hung parliament increasing, we could see the pound fall further against the Aussie.
GBP/NZD: Currently trading at 1.9391
Overnight the Kiwi dollar has followed the Australian dollar and strengthened against Sterling. This is on the back of forecast-beating CPI data coming out of Australia, which has dampened any expectations of a rate cut.
Today attention will be on the MPC official bank rate vote (09:30). With inflation still at zero for the UK economy, it is highly unlikely that there will be any members voting for a rate rise. However, if there is a change and some members vote for a rate reduction to try and stimulate the economy and raise inflation, expect some Sterling weakness and further Kiwi dollar gains over the course of the day.
GBP/CAD: Currently trading at 1.8334
The loonie weakened in yesterday’s session as Canadian Wholesale Sales declined for a second consecutive month, decreasing 0.4 per cent in February.
Today brings a relatively quiet calendar, with the only release being the MPC Bank Rate votes from the UK, which we expect will remain unchanged. We therefore don’t anticipate much change today, with activity moving within a range.
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