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Can pound hold onto stronger footing after BoE reports?

business-articlesCan pound hold onto stronger footing after BoE reports?
  • Pound shakes off underwhelming UK growth data
  • Canadian dollar remains under pressure ahead of house price index
  • Softening inflation may ease US dollar demand
 
Signs of BoE optimism to encourage pound strength
 
Yesterday’s surprise stagnation in the monthly UK gross domestic product figure failed to weigh down pound exchange rates in the face of another bout of Brexit-based optimism.
 
Another boost could be in store for the pound this morning with the release of the Bank of England’s (BoE) latest credit conditions and bank liabilities surveys.
 
If the reports highlight a greater sense of optimism in the domestic outlook this could help to push GBP exchange rates higher across the board.
 
On the other hand, evidence that domestic credit conditions are weakening may limit demand for the pound today.

Slowing Canadian housing market limits CAD potential
 
Signs of weakness within the Canadian housing market and slumping oil prices have kept CAD exchange rates biased to the downside.
 
However, the mood towards the Canadian dollar could improve this afternoon if August’s new housing price index proves positive.
 
An uptick in prices would go some way towards restoring confidence in the outlook of the domestic housing market and the health of the wider economy.
 
Another underwhelming performance may drive the Canadian dollar to shed further ground against its rivals, though.
 
Weaker US inflation to dent US dollar demand
 
While the consumer price index is not the favoured inflationary gauge of the Federal Reserve today’s data is still likely to provoke US dollar volatility.
 
Forecasts point towards an easing in September’s headline CPI, with investors anticipating a decline from 2.7% to 2.4% on the year.
 
Even a sharp deceleration in price pressures is unlikely to discourage the Federal Reserve from raising interest rates again before the end of the year, though.
 
Another uptick in inflation, however, may encourage the US dollar to extend its bullish trend as the case for greater Fed hawkishness builds.
 
Upcoming Data
 
Thursday, 11th October 2018
09:30 GBP Bank of England Credit Conditions and Bank Liabilities Surveys
13:30 CAD New Housing Price Index
13:30 USD Consumer Price Index
22:30 NZD Manufacturing PMI
 
Philip McHugh

Philip McHugh

Joining the corporate trading desk in 2007, Phil now over sees all of Currencies Direct’s corporate dealing activity. Having gained experience working with hundreds of businesses to optimise international payments processes and execute comprehensive risk management strategies, Phil currently works with a portfolio of corporate clients whilst managing Currencies Direct’s overall market exposure

Phil has FCA approval and has completed the Certificate in International Treasury Management (CertiTM)

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