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Daily Market Analysis June 16th 2017 |
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Pound boosted by Bank of England (BoE) shocker Sterling bounced back on Thursday despite unfortunate retail sales data as the Bank of England (BoE) delivered a rather surprising interest rate decision. GBP/EUR jumped from €1.1355 to €1.1465, GBP/USD recovered from $1.2694 to $1.2785, GBP/AUD climbed to AU$1.6865 from AU$1.6692, GBP/NZD rose from NZ$1.7563 to NZ$1.7762 and GBP/CAD advanced from a low of C$1.6824 to C$1.6989. Can we expect more movement before the weekend? Keep scrolling to find out… |
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Today's Rate The rates above are using the British pound (GBP) as the base rate. All rates are for indication purposes only. Prices can vary dramatically based on amount and delivery date. |
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| "If the odds of the BoE increasing interest rates were low before the general election, they’re now bordering on non-existent in light of the uncertain political situation."  Transfer 24/7 with our currencies direct app   |
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What’s been happening? Well. The Bank of England (BoE) interest rate decision was certainly surprising wasn’t it? Given all the recent political turbulence and concerning UK data releases, members of the bank’s Monetary Policy Committee (MPC) would be forgiven for balking at the thought of raising interest rates. However, the vote on whether or not to hike borrowing costs was actually split 5 – 3 and the division was enough to help the pound recover its earlier retail sales related losses (retail sales excluding auto fuel plummeted -1.6% on the month in May). Lloyds attributed the shift to the recent surge in inflation, stating that the meeting minutes ‘noted that the continued fall in Sterling over the past month raised the risk that inflation would overshoot the Bank’s current projections by more than expected. Given this, and the continued strength of the labour market, a case for an immediate policy response could be made.’ The pound advanced against the majors after the report’s release and managed to hold gains as the weekend approached. |
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What's coming up? There’s no UK news on the calendar today, so it would take some developments in the political sphere to trigger further pound movement before the weekend. There are a couple of high profile reports set for publication in the US however, including housing starts and the University of Michigan confidence measure. Confidence is believed to have dipped ever-so-slightly in June, but an on-forecast result isn’t likely to have much of an impact on the Federal Reserve’s policy plans. FOMC member Robert Kaplan is also due to speak later today. If he provides some clarity on the Fed’s intentions regarding the winding down of QE we could see some GBP/USD exchange rate fluctuations this afternoon. Next week is virtually devoid of economic releases for the UK but as Brexit negotiations are set to start the days ahead could prove anything but dull. Short to mid-term forecasts for GBP exchange rates will be largely determined by how the first round of talks go. 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. |
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| Phil McHugh,
Trading Floor Manager Phil provides dealing and hedging services whilst also helping to manage Currencies Direct overall market exposure. |
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