British Pound Bullishness Fades on Signs of Brexit's Impact on UK Jobs

Published: 5 Jul at 5 PM Tags: Euro, Dollar, Pound Sterling, America, UK, Eurozone, Australian Dollar, New Zealand Dollar, Canadian Dollar, Australia, New Zealand, USA, Canada, Germany,

Pound Sterling (GBP)
On Thursday, the Pound briefly saw stronger demand as investors reacted to a speech from Bank of England (BoE) Governor Mark Carney. Carney appeared optimistic about Britain’s economic outlook due to recent stats and this bolstered market confidence that the bank could be on track to hike UK interest rates in August.

However, Brexit jitters weighed on Sterling and caused the Pound to fall later in the day. News that JPMorgan was planning to move some jobs out of London onto continental Europe within in the next few months made markets more anxious about the effect the Brexit process could have on UK jobs.

Friday’s UK labour productivity data is unlikely to be particularly influential, but any Brexit developments could drive Pound trade.


Euro (EUR)
Despite concerns about how US trade tariffs could impact the Eurozone economy, recent Eurozone data has indicated that the trend of slowing Eurozone growth may have come to an end.

German factory orders from May beat expectations on Thursday, and the latest Eurozone retail PMI showed a steady improvement too.

If Germany’s May industrial production report beats forecasts on Friday, the Euro may avoid losses against the Pound this week.


US Dollar (USD)
Despite the latest Brexit jitters, the Pound to US Dollar exchange rate continued to trend above the week’s opening levels on Thursday afternoon.

Thursday saw the publication of some disappointing US employment data from ADP, but also some stronger-than-forecast non-manufacturing PMI data from ISM.

US Dollar investors were hesitant to move too much in response to the data though, as they anticipated the evening’s key Federal Reserve meeting minutes report, and Friday’s US Non-Farm Payroll results.


Australian Dollar (AUD)
There hasn’t been much change to the Australian Dollar outlook since Wednesday’s Asian session, when Australian exports and retail sales stats impressed investors but the nation’s latest trade balance results disappointed investors.

Australian Dollar trade remained limited by US trade jitters, but investors were hesitant to sell the already weak currency much either. This has kept GBP/AUD range-bound this week.

Friday’s Asian session will see the publication of Australia’s June construction PMI from AiG, but if this doesn’t surprise investors much then GBP/AUD trade will remain focused on Brexit and trade jitters.


New Zealand Dollar (NZD)
The New Zealand Dollar continues its attempts to recover from major lows, and thanks to Brexit jitters has largely avoided losses against the Pound this week so far.

A lack of notable New Zealand data, as well as trade jitters, have limited the New Zealand Dollar’s recovery. Pound gains have been limited by key NZD support though.

New Zealand trade is unlikely to change much unless there are developments in global trade jitters, so GBP/NZD is on track to end the week near its opening levels.


Canadian Dollar (CAD)
The Pound to Canadian Dollar exchange rate had been taking advantage of weaker oil prices and global trade jitters, as well as higher Bank of England (BoE) interest rate hike bets, to advance since Wednesday.

However, on Thursday afternoon GBP/CAD tumbled in reaction to news that JPMorgan would move jobs out of the UK. As a result, GBP/CAD trended more closely to the week’s opening levels again.

Friday will see the publication of most of this week’s most influential Canadian data, including May trade results and June’s Canadian job market report. These figures could cause some late-week Canadian Dollar movement.
As of Thursday, 5th July 2018, the Pound Sterling currency rates mentioned within this news item were as follows:

GBP EUR exchange rate was 1.1307, GBP USD exchange rate was 1.3221, GBP AUD exchange rate was 1.7895, GBP NZD exchange rate was 1.946, and GBP CAD exchange rate was 1.7363.

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