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Inflation Data Smacks GBP Rate Down
The Pound fell sharply against the US Dollar, Euro and other major peers on Wednesday after the Bank of England cut its inflation and growth forecasts. Today the UK currency remains weaker against the majority of other currencies and is likely to remain softer for the rest of the week due to a lack of market moving economic data releases.
US Dollar
The US Dollar advanced strongly against the Pound yesterday due to the Bank of England inflation report. The ‘Greenback’ is forecast to strengthen further throughout today’s session as economists turn their attention to the publication of the latest continuing and initial jobless claims data which is expected to confirm that the US labour market is strengthening.
The Euro
The Euro advanced early in the session after it found support from the release of better than forecast inflation data out of France and Spain. Inflation in Germany came in as forecast at 0.8% on a year on year basis. The currency was also higher as economists await the release of the latest European Central Bank’s latest monthly report.
Australian Dollar
The ‘Aussie’ was little moved against the US Dollar but retained gains against the Pound after domestic data showed that inflation expectations in Australia rose last month. In the report compiled by the Melbourne Institute, inflation expectations for Australia rose to 4.1% in October from 3.4% the previous month.
New Zealand Dollar
The New Zealand Dollar remained higher against the battered Pound and was holding steady against the US Dollar due to the release of positive manufacturing activity. The New Zealand Dollar found support after data showed that the Business NZ Manufacturing Index rose to 59.3 last month from a revised reading of 58.5 in September. The figure was upwardly revised from a previously estimated 58.1.
Canadian Dollar
The ‘Loonie’ made modest gains on Wednesday and looks set to continue to edge higher against the Pound and other peers as the market awaits the release of a number of Canadian data releases. The currency remains under pressure however due to more oil price drops.
South African Rand
The Rand weakened against the US Dollar and other rivals early on Thursday as investors braced for official data, which is expected to show falling output in the mining sector. The anticipated fall in mining production in September is expected to be a 3.45% year-on-year decline, a smaller contraction than the previous month but still bad news for a sector influencing other parts of the economy.
