One-month high for GBP/USD, pound broadly stronger

More comments from high-profile Bank of England (BoE) officials helped the pound’s bullish run continue on Thursday.

GBP/EUR tiptoed from €1.1356 to €1.1389, GBP/USD struck a one-month high of $1.3027, GBP/AUD fluctuated before opening Friday at AU$1.6939 and GBP/NZD peaked at NZ$1.7859 before edging down to NZ$1.7778. However, with rising oil prices lending the Canadian dollar support, GBP/CAD failed to hold its best levels of C$1.6936.

What should you be watching out for today? Keep scrolling to find out…

What’s been happening?

Bank of England (BoE) Governor Mark Carney sent the pound scuttling higher on Wednesday with hints that the central bank might need to start considering some removal of stimulus.

Although he said the UK isn’t ready for higher interest rates as recently as last week, this slight change in tack was enough to boost rate hike expectations and lift the pound.

Sterling found similar support on Thursday after BoE Chief Economist Andy Haldane seemed to echo Carney’s sentiments.

Haldane stated; ‘We need to look seriously at the possibility of raising interest rates to keep the lid on those cost of living increases. For now we are happy with where the rates are, we need to be vigilant for what happens next.’

BoE speculation kept the pound buoyant against most the majors and the news that Prime Minister Theresa May survived the Queen’s Speech vote also contributed to the pound’s run of gains.

While GBP/USD managed to achieve a one-month high, GBP/EUR failed to cling to its best levels in the wake of out-performing German inflation data.

The pound did jump to a three-week high against the New Zealand dollar, however, and remained fairly resilient against the Canadian dollar in spite of rising oil prices.

What's coming up?

The pound could slide against the euro this morning if the Eurozone’s consumer price index comes in better-than-forecast.

Inflation in the currency bloc is believed to have eased from 1.4% to 1.2% in June, but Germany’s more cheerful-than-expected result could be enough to keep consumer price pressures elevated.

As the European Central Bank (ECB) has signalled that the rate of inflation is a key consideration when it comes to setting the future path of monetary policy, a higher Eurozone inflation figure would be euro-supportive.

We’ve also got the UK’s final first quarter growth figure to watch out for, but this is unlikely to have much impact on GBP exchange rates unless it deviates from the initial estimate of 2.0%.

Over in North America, Canada will be releasing its own growth figures for April. With the Bank of Canada (BOC) recently hinting that higher borrowing costs could be on the horizon, upbeat GDP data may send the Canadian dollar higher.

Finally, GBP/USD could drop from its one-month high if US personal consumption expenditure figures impress or the University of Michigan confidence figure shows improved sentiment.

We’re here to talk currency whenever you need us, so get in touch if you want to know more about the latest news or how it could impact your currency transfers.

Phil McHugh,
Trading Floor Manager

Phil provides dealing and hedging services whilst also helping to manage Currencies Direct overall market exposure.