Pound lower as consumer confidence falls

Philip McHugh December 21st 2017 - 2 minute read

Sterling’s lacklustre week looks set to continue, with a disappointing UK confidence report undermining demand for GBP.

The GBP/EUR exchange rate is trading in the region of €1.1259, GBP/USD is lingering around $1.3365, GBP/AUD is up slightly at AU$1.7454, GBP/NZD has recovered to NZ$1.9118 and C$1.7146 is clinging to the day’s opening levels of GBP/CAD.

What news should you be watching out for today? Keep scrolling to find out…

What’s been happening?

The pound spent Wednesday fluctuating but did manage to record some modest gains after Bank of England (BoE) Governor Mark Carney’s speech to parliament.

Although Carney steered clear of the subject of monetary policy, he did assert that he felt a special financial services trade deal could be implemented. However, as this flew in the face of EU Brexit negotiator Michel Barnier’s comments from earlier in the week, the remarks didn’t have much of an impact on Sterling.

GBP exchange rates then came under pressure overnight as the GfK consumer confidence index unexpectedly slid from -12 to -13.

Joe Staton of GfK noted;

‘It has been a slipping and sliding year. The Overall Index Score has slipped from – 7 in January to -13 in December – and not a single positive score in between. In fact, we have not been in positive territory for nearly two years […]

We need to see several issues move on before the downward trend of the consumer mood changes. We need to have a better sense of how Brexit will pan out, and also of how quickly and how far interest rates will rise. But none of this will be resolved quickly so there’s every likelihood that 2018 will take us lower.’

Elsewhere, the US dollar failed to derive much benefit from progress in President Trump’s tax reforms, and the euro was mildly boosted by USD weakness.

The New Zealand Dollar, meanwhile, initially spiked after some better-than-forecast domestic GDP data, before later giving back some of its gains.

What’s coming up?

The only UK data to keep an eye on today is the nation’s public borrowing data.

Although the report is expected to show that the British government borrowed more in November to balance the books, the impact of the data on Sterling may prove minimal.

This afternoon the Canadian dollar could climb if the latest Canadian inflation figures show the forecast uptick in consumer price pressures.

Canadian retail sales are also expected to detail an increase in consumer spending.

Over in the US, the nation’s GDP report is expected to confirm expansion of 3.3% in the third quarter.

Finally, the euro could climb as long as the Eurozone’s consumer confidence index meets predictions for an increase from 0.1 to 0.2.

Written by
Philip McHugh

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