Sterling Jumps Again as Markets Focus on Central Bank Speculations and Developments

Published: 24 Jan at 2 PM Tags: Euro, Dollar, Pound Sterling, America, UK, Eurozone, Australian Dollar, New Zealand Dollar, Canadian Dollar, Australia, New Zealand, USA, Canada, China, Germany,

Pound Sterling (GBP)
Today’s UK PMI projections for January came in slightly stronger than expected, supporting bets that the Bank of England (BoE) would not cut UK interest rates next week. However, the data was not as strong as some investors hoped. As BoE uncertainty remains, the Pound slipped slightly today.

The Pound’s movement may be limited for much of next week, as investors await the Bank of England’s January policy decision. The BoE decision will be held on Thursday.


Euro (EUR)
While not all Eurozone PMIs were impressive today, the Euro actually found fresh support in the PMI projections. As German services and manufacturing both beat forecasts, investors became more hopeful that Germany’s economy was showing signs of recovery.

Next week’s Eurozone economic calendar is filled with key German ecostats. This includes business and consumer confidence, as well as unemployment and inflation. Stronger than expected data would further boost German economic recovery hopes and the Euro.


US Dollar (USD)
A combination of decent US data and safe haven demand kept the US Dollar relatively steady towards the end of the week. As market concerns about the coronavirus spreading from China persist, risk-on movement fizzled out and the US Dollar remained appealing.

Next week’s US economic calendar will be a little busier. At the beginning of the week, US home sales and Dallas Fed manufacturing data will be published. Key US growth data will be published later in the week.


Australian Dollar (AUD)
While Reserve Bank of Australia (RBA) interest rate cut bets have lightened significantly this week, the Australian Dollar’s strength was limited. Due to persisting market concerns about a spreading coronavirus and its potential impact on China trade, the Australian Dollar was unable to capitalise on the week’s strong Australian data.

The Reserve Bank of Australia’s February policy decision will be held the week after next. This means Australian Dollar investors will be keeping a close eye on Australian inflation data when it’s published on Wednesday.


New Zealand Dollar (NZD)
Strong New Zealand inflation data published during the Asian session has caused Reserve Bank of New Zealand (RBNZ) interest rate cut bets to lighten further. The New Zealand Dollar benefitted from this news, but gains were limited by coronavirus uncertainties.

Continued developments in global markets and risk-sentiment will drive the New Zealand Dollar next week. New Zealand business confidence and trade balance stats will also be published.


Canadian Dollar (CAD)
The Canadian Dollar saw mixed movement in the second half of the week. As the Bank of Canada (BoC) indicated that the door was open for a potential rate cut if Canadian data didn’t improve, the currency’s strength was limited. Today’s Canadian retail sales results beat forecasts, but Canadian Dollar demand remained mixed on risk-sentiment,

Developments in risk-sentiment will influence CAD for most of next week. However, the Canadian wage and growth results due near the end of next week could be highly influential if they affect Bank of Canada (BoC) policy speculation.
As of Friday, 24th January 2020, the Pound Sterling currency rates mentioned within this news item were as follows:

GBP EUR exchange rate was 1.1859, GBP USD exchange rate was 1.3074, GBP AUD exchange rate was 1.9147, GBP NZD exchange rate was 1.9787, GBP CAD exchange rate was 1.7187, and GBP CNY exchange rate was 9.0692.

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