Nicholas Ebisch, FX Analyst
The Conservatives and Labour are neck and neck tied at 34% according to the latest BBC poll, the questions now almost without a doubt becomes, ‘which parties will band together to form a majority government’? Sterling has been steady so far throughout the election season with minimal volatility. However, with just over two weeks to go, we may see some unease in the UK currency as we approach the big Election Day. Later on today, the governors of the Bank of Canada and the Reserve Bank of Australia will be speaking at separate engagements. Overnight tonight, the Monetary Policy Meeting Minutes will be released from the Australian central bank’s latest meeting. The Australian dollar and Canadian dollar have staged a comeback in the last few months as commodity prices have stabilized.
GBP/EUR: Currently trading at 1.3866
Friday morning saw the UK Jobless rate fall to its lowest level since 2008. Followed by a negative release for CPI in the Eurozone, Sterling managed to make some gains in the morning, with a peak of 1.3937 for the day.
The main release for this pairing today is the German Buba Monthly report (11:00). With a pickup in economic conditions in Europe, a hawkish release here could see some gains for the single currency. However, if there is continued uncertainty over the Greek situation, these gains may be limited.
GBP/USD: Currently trading at 1.49555
Friday saw the UK’s unemployment rate decreasing as forecasted to 5.6%, its lowest rate since July 2008, and the claimant count decreasing by 20.7K, less than forecasted but enough to reach a 40-year low. The US m/m CPI and Core CPI remained at 0.2% as expected. Friday saw the pound strengthen in the morning, peaking around 1.50465, and the dollar gained back some of that ground over the course of the afternoon.
The agenda for today is fairly quiet, with no major data expected out of the UK or the US. The rate may remain range-bound as a result.
EUR/USD: Currently trading at 1.0783
Friday morning continued to see gains for the euro, before its advance was halted in the afternoon on the back of CPI figures coming line with expectations and a positive consumer sentiment figure from the US.
Today sees a quiet day for the pairing as there are no announcements scheduled from both sides of the Atlantic. We may see some euro weakness however, in anticipation of Friday’s crucial decision regarding Greece’s future in the Euro-zone.
GBP/AUD: Currently trading at 1.9167
The second half of last week saw a 3 cent gain for the Aussie as the pairing closed out for the week at 1.918. With a very quiet UK economic calendar this week, any market movement will be largely dictated by RBA Gov Stevens comments later today and CPI figures this Wednesday. As we approach the end of the month, we expect general election speculation to ramp up which historically has had a negative effect on the pound.
GBP/NZD: Currently trading at 1.9380
New Zealand’s Consumer Price Index data was released overnight during the Asian session and showed a slight drop from the previous month to -0.3%. This figure was by no means disastrous and was largely in line with market expectations. Perhaps of more significance was the decision by China’s central bank to support growth by cutting the amount of cash that lenders must hold as reserves. This should help keep liquidity stable in the world’s second largest economy and the New Zealand dollar has benefitted on this news.
Sterling data is thin on the ground today so the kiwi dollar should be able to hold on to its gains until the Reserve Bank of Australia’s Governor Stevens speaks at 17:30 this afternoon.
GBP/CAD: Currently trading at 1.8249
On Friday we learnt that UK unemployment fell to its lowest rate since July 2008, coming in line with forecasts at 5.6 per cent. This news bolstered the pound and made it hard for the loonie to take hold, even after strong figures were released from Canada. CPI improved by 0.6 per cent and Retail sales grew by 2 per cent.
Today Governor Poloz speaks at 15:05pm, which will provide onlookers with a better understanding regarding policy. The activity will be quiet up until that point, after which we expect to see some volatility.
This blog is prepared by Caxton FX Ltd for information purposes only and may contain personal views that are not the opinion of the company. This is not an offer to purchase or sell any security or an investment advertisement. Caxton FX Ltd is authorised and regulated by the Financial Conduct Authority, although foreign exchange transactions with Caxton FX are regulated by HM Revenue and Customs. This email does not constitute advice for any foreign exchange transaction, nor is it intended as a solicitation for funds or recommendation to trade.
Subscribe to our morning, weekly or monthly reports here and make sure you never miss an update: https://www.caxtonfx.com/currency-banking/the-caxton-account#Free-currency-reports
