USD/GBP, CAD/GBP Exchange Rates Continue to Benefit from Pound Sterling (GBP) Softening after Interest Rate Rise Hopes are Stalled
Dovish Trading Holds Value of Pound (GBP) Down Ahead of US and Canadian Employment Figures
Both the ‘Greenback’ (USD) and ‘Loonie’ (CAD) continue to profit from the dovish downturn of the Pound (GBP) as it struggles to shake off the impact from yesterday’s Bank of England (BoE) data. Upcoming unemployment figures for the US and Canada could stand to see both the USD/GBP and CAD/GBP exchange rates consolidate these gains to rise to fresh weekly highs.
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At time of writing the GBP/USD pairing was trending around 1.5497, while GBP/CAD is moving in the region of 2.0328.
Pound (GBP) Exchange Rate Declines Across the Board Against Majors as Bank of England Data Disappoints Today
In something of a shock today the Bank of England (BoE) Monetary Policy Committee (MPC) voted 8-1 in favour of leaving interest rates at their current level. Causing a clear and rapid plunge in value for the Pound (GBP) against the majors this move has put definite doubt on the prospect of an interest rate rise taking place in the near future. Two, or even three, MPC members had been expected to cast in favour of a hike at this session, and the meeting minutes seem to suggest that the feeling is decidedly more dovish than anticipated.
Also of note was the revision of inflation rate projections. The MPC is now forecasting that inflation will only reach the 2% target towards the end of 2017. This equally does not bode especially well for Sterling, creating concern amongst traders to help push the currency lower as so-called ‘Super Thursday’ put an end to its bullish run.
Jobless Claims Fail to Move US Dollar (USD) Today as Exchange Rates Remain Hawkish
The ‘Greenback’ (USD) remains bullish this week as the Non-Manufacturing PMI exceeded expectations to post a significant rise, coming in at 60.3 over the previous figure of 56. In spite of a weaker Manufacturing PMI on Monday, this suggests that the US economy remains in a strong state of growth. Encouraging news as the rest of the world continues to feel the effects of the commodity crash and Chinese slowdown, prompting pundits to rally to the safe-haven currency in numbers.
Today’s Initial and Continuing Jobless Claims provided a mixed bag for the ‘Buck’, as fresh claims saw a lower-than-expected rise but continuing claims also fell by less than anticipated. Consequently reaction was fairly minimal. Unemployment data on Friday will no doubt have a more significant contribution to movement, as one of the key elements the Federal Open Market Committee (FOMC) has cited in holding back an interest rate hike is the nation’s employment situation. Further strength here could well signal that the Fed will begin progress towards a rise with September’s Rate Decision.
Capitalising on the weakening of the Pound the USD/GBP exchange rate has boosted to 0.6440, with GBP/USD sliding to 1.5522.
Commodity Concerns Keep Canadian Dollar to US Dollar (CAD/USD) Exchange Rate Trending Low In Advance of Unemployment Figures
Oil prices continue to be bad and the ‘Loonie’ (CAD) continues to suffer. In spite of crude oil rising in value for the second day running yesterday, getting back above $50 a barrel, the commodity markets remain sluggish. Fears still abound for further potential collapses, which are not eased by Canada’s current state of recession. Both need to produce a significant turnaround in the coming months if the Canadian Dollar is to see a marked improvement in prospects.
Canada’s Employment Change and Unemployment Rate figures are both due for release tomorrow and seem unlikely to offer the Canadian Dollar much hope of a rally. However, should either come in unexpectedly positively the risk-sensitive currency could experience something of an upturn going into the weekend.
Nevertheless, the ‘Loonie’ is currently trending well against many of the majors, with CAD/GBP rising away from a multi-year low to strike 0.4882 as CAD/USD trends narrowly around 0.7588.