Home > XE Currency Blog > XE Market Analysis: British Pound on The Rise Ahead of BoE Meeting


XE Currency Blog

Topics5728 Posts5773
By xemarketanalysis October 30, 2017 2:51 pm
    xemarketanalysis's picture
    xemarketanalysis Posts: 539
    XE Market Analysis: British Pound on The Rise Ahead of BoE Meeting


    • USD is weaker as Trump's former campaign manager was indicted.
    • The EUR is stable at lower levels, as the EZ economic sentiment improves.
    • CAD is soft as the market awaits GDP and jobs data.


    The British Pound has risen to a 4-week high versus the Euro as markets bet on the Bank of England raising rates by 0.25% when they meet on Thursday. With unemployment at a 42-year low and inflation at a 5-year high of 3%, the Bank's monetary policy committee signaled last month that a rate rise would be appropriate "in the coming months".


    The US Dollar is broadly weaker despite stronger than expected consumer spending data for last month that rose at the fastest pace since 2009. The main reason for the Dollar weakness is the announcement that Trump's former campaign manager and a member of his staff have been charged with 12 offenses, including money laundering and conspiring against the US. This week we have a lot of US data to be released including the employment report as well as the Fed meeting.


    The Pound is higher across the board today as markets anticipate the first UK rate rise in a decade (see highlight). 


    The Euro has steadied over the weekend with Spanish markets stable and investors focusing on the potential US political fallout from the ongoing Russia probe. Eurozone business, industrial, and consumer confidence measure all strengthened in October, reflecting the strong, underlying tone of growth in the region. Tomorrow is a major data feast from the Eurozone with Q3 GDP, CPI for October, and unemployment for September being released. Inflation will be a key trigger given the ECB's dovish taper last week where they focused on the still low pace of CPI in their decision making. 


    The Loonie is marginally positive in the session versus its US counterpart, with the US Dollar under pressure due to Trump's ex-campaign manager. Having hit a 2-year high following a second-rate hike from the Bank of Canada, the Loonie has lost over 6% as market interest rate expectations were pared back by the Bank who warned of "significant uncertainties" for the economy.


    The Aussie Dollar hit a fresh 3-month low versus the US Dollar as last week's inflation data continued to weigh on the Aussie with the focus on interest rates. The market isn't fully pricing in a rate hike from the RBA until 2019, resulting in the premium offered by Australian two-year government debt over US bonds shrinking to just 0.26%, near the smallest since early 2001. 


    Paste link in email or IM