Pound fluctuating before UK growth figures

The pound was putting in a mixed performance ahead of the UK’s Q2 growth data.

GBP/EUR was shifting between €1.1174 and €1.1194, GBP/USD achieved a high of $1.3032, GBP/AUD advanced from AU$1.6406 to AU$1.6528, GBP/NZD dipped from a best level of NZ$1.7580 and GBP/CAD was static at C$1.6281.

What currency movement can we expect today? Keep scrolling to find out...

What’s been happening?

After gaining at the start of the week the pound was pretty flat on Tuesday.

An upbeat business optimism report from the Confederation of British Industry (CBI) had little impact with investors looking ahead to today’s UK growth data, although the GBP/EUR exchange rate was able to hold its own in spite of Germany’s IFO business confidence figures all coming in higher-than-expected.

However, during the Australasian session the pound was able to advance on the Australian dollar, with GBP/AUD achieving a high of AU$1.6528.

The Australian dollar broadly softened after Australian inflation figures for the second quarter came in below forecast and Reserve Bank of Australia (RBA) Governor Philip Lowe indicated that the central bank isn’t planning to increase interest rates in the near future.

Similarly, the GBP/NZD exchange rate briefly peaked at NZ$1.7580 as a Reserve Bank of New Zealand (RBNZ) official indicated that a weaker domestic currency would be better for the NZ economy. The ‘Kiwi’ managed to avoid sharp losses, however, as New Zealand’s trade surplus was shown to have widened significantly in June.

What's coming up?

The week's most important UK news, the nation's preliminary second quarter growth data, is due for release this morning. While British economic output is believed to have improved slightly on the quarter (with a modest improvement in growth from 0.2% to 0.3% expected) the year-on-year figure is forecast to fall.

Such a result could lead to small pound losses, but surprisingly upbeat growth numbers have the potential to drive GBP exchange rates away from recent lows.

Of course, we also have the Federal Reserve interest rate decision to contend with. No policy change is anticipated, so the tone adopted by Chairwoman Janet Yellen will be key.

If Yellen implies that interest rates will still be adjusted for a third time in 2017 the US dollar could climb. However, hints that the Fed will take a cautious approach to raising borrowing costs further would be US dollar-negative and could boost higher-risk currencies like the Australian and New Zealand dollars.

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.