Today's Currency Market Focus
GBP: Another dive down
EUR: Is the ECB warming us up?
USD: Pause in rally
GBP: Another dive down
The Pound dropped to a five-month low against the Euro yesterday as fears of a ‘no deal’ Brexit are on the rise.
With less than 8 eight months to go until Britain leaves the EU, nerves are fraying.
Last week the Bank of England stated that the risks of a no deal situation are “uncomfortably high”.
Adding to this, Liam Fox, the Trade Minister, said this week that the odds of exiting without a deal were “60-40”.
The uncertainty of Brexit is overshadowing any UK economic news. Let’s hope the fear mongering is a negotiation bluff with the Europeans.
EUR: Is the ECB warming us up?
The European Central Bank (ECB) has been criticised for being behind the curve.
Admittedly, the last financial crisis hit the EU harder than most, so they are understandably a cautious bunch.
However, yesterday the ECB announced that the recent acceleration in wage growth in the EU could foreshadow higher future inflation. Hints like this often precede a change of policy.
If the economic numbers continue to pick up, then the ECB may well have to play catch up with the other big central banks.
USD: Pause in rally
The Dollar took a breather yesterday. Traders attributed the slight dip to the absence of any news.
To recap, the Dollar has been rising on fears of global trade wars, so a lack of news is a reason to sell.
Looking beyond the trade wars, the economic picture in the US continues to point to solid growth coupled with tight labour conditions.
This is a recipe for further rate rises this year, which will help underpin the Dollar.
There a light economic calendar in the first half of the week but President Trump could always liven things up.
Thanks For Reading, What Next?
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Current rates:
Wednesday 8th August 2018 at 14:30
£1.00 GBP = 1.1100 EURO
£1.00 GBP = 1.2870 USD
£1.00 GBP = 1.7381 AUD
£1.00 GBP = 1.9094 NZD
£1.00 GBP = 1.6806 CAD
£1.00 GBP = 17.2689 ZAR
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