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Higher level of UK consumer credit may lift pound

business-articlesHigher level of UK consumer credit may lift pound
  • Pound looks for rally on stronger consumer credit
  • Easing German inflation to dent euro
  • Canadian dollar gains likely on stronger gross domestic product data
 
 Car production plunge weighs on pound
 
After UK car production data saw a -44.5% contraction on the year in April the pound came under further pressure, remaining on a weaker footing against its rivals.
 
However, GBP exchange rates could find a rallying point this morning if April’s net consumer credit data improves as forecast.
 
Investors expect to see consumer credit rise on the month, suggesting that domestic confidence improved even in the face of ongoing Brexit-based uncertainty.
 
While UK wage growth is slowing, a stronger reading here could encourage bets that consumer spending may continue to fuel economic growth in the second quarter.
 
 
Euro losses likely on weaker German inflation
 
The appeal of the euro could diminish this afternoon as forecasts point towards the headline German consumer price index falling back.
 
As Easter prices are thought to have bolstered April’s inflation reading investors expect to see a downward correction in May’s report.
 
Even so, signs that inflation is moving further away from the European Central Bank’s (ECB) 2% target may still drag the single currency lower across the board today.
 
Unless markets see evidence that inflationary pressure is still building within the Eurozone’s powerhouse economy EUR exchange rates look biased to the downside.
 
 
Rebounding Canadian growth set to boost CAD
 
After the Bank of Canada (BOC) showed signs of optimism at its May policy meeting the Canadian dollar has remained on a stronger footing against its rivals.
 
CAD exchange rates could gain further ground this afternoon on the back of March’s gross domestic product report.
 
If growth rebounds as forecast on the month this could bolster market confidence in the resilience of the Canadian economy, giving the BOC greater cause for optimism.
 
As long as evidence points towards a stronger level of domestic growth the Canadian dollar looks set to end the week on an uptrend.
 
Upcoming Data:
 
Friday, 31st May 2019
09:30 GBP Net Consumer Credit
13:00 EUR German Consumer Price Index
13:30 CAD Gross Domestic Product
13:30 USD Personal Consumption Expenditure Core
 
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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