Pound to Euro Exchange Pushes Higher

On Wednesday we saw the pound to euro exchange rate push higher still on strong UK economic data. The CBI Distributive Trade Survey came out much higher than expected, with last month’s reading of -10%, an expectation of 5% this month but actually delivering 42%. The survey is an indicator to UK retail trends and a high reading is seen as positive for the Pound while a low reading as negative. The result was a decent spike from the pound which rose against all its major pairings before trading sideways the rest of the day.

FOMC Member Speeches

The afternoons trade was littered with speeches from various FOMC members in amongst a few data releases. US durable goods orders came out above forecasts while mortgage data as expected and new home sales lower than analysts expected. All in all the mixed bag of ecostats and vagaries surrounding whether or not we will see the Federal Reserve raise interest rates by the end of the year left the US dollar trading fairly flat throughout its trading session. Finally in the evening President Trump announces his tax reforms, although good for the middle classes, it was a non-event for the markets despite the anticipation beforehand.

Loonie Weakens After Dovish Speech

Yesterday, as well as the many Fed member speeches we also saw the Bank of Canada chief Poloz talk in the afternoon. His “not so hawkish” sentiment on the Canadian economy led the way for the Loonie to fall against the pound as he referenced the recent economic data showed the economy was likely to show modest growth in the second half of 2017. We have seen two interest rate rises by the BoC this year with another 2 priced in already by markets by the first quarter of 2018, but the comments by Poloz hampered sentiment as he stated “there is no pre-determined path for interest rates” noting “we’re data dependant” leading markets to price back out the next two rises to some extent. The upshot for those sending money to Canada was over a cents gain, making C$ 200,000 nearly £1000 cheaper in a matter of minutes.

RBNZ Interest Rate Decision

Late last night we had the Reserve Bank of New Zealand announce their interest rate decision and policy statement. The markets were expecting now change to the current 1.75% level and we weren’t disappointed. The accompanying statement gave no surprises either, stating policy would remain accommodative for a considerable period. The RBNZ expect inflation to remain around the two percent level so any adjustment to interest rates is unlikely going forward and a weaker Kiwi is seen as beneficial to the economy – good news for anyone transferring money to New Zealand.

Thursday’s Outlook

It’s a very EU heavy eco-stat day today with a speech by the ECB member Praet and Lautenschlager, plus consumer confidence and economic sentiment surveys. German inflation follows at lunchtime before we head across the pond for US unemployment figures, inflation indicator and GDP reading – all of which will have an impact on speculation over interest rate rises and pound to euro exchange rates.

To keep abreast of the ever changing markets and get some friendly guidance on your currency needs, contact one of the CI team today to discuss your requirements.