Sterling up after retail data and Hancock’s resignation
Hands up anyone surprised that Sterling strengthened on the resignation of Matt Hancock. Anyone? Nope, you are very astute. The appointment of Sajid Javid into the British Health Secretary role, given his good past relations with the Treasury, should make policy changes simpler. So, with that news and a very positive retail sales report from the CBI, despite a rejuvenated US Dollar, GBPUSD is up to USD 1.39 this morning and GBPEUR is trending slightly higher at EUR 1.650.
German import prices up 11.8% y/y
That rise in the GBPEUR rate is not dulled by the 11.8% year on year rise in German import prices, announced this morning. That is to be expected when you compare anything in 2021 against the same months a year earlier. So the strength is added to the Euro was limited.
Commodity price rises supporting Aussie and Kiwi Dollars
The GBPAUD rate hadn’t managed to push higher and part of the reason for that is the rising value of Aussie exports. Iron Ore is hitting record highs at the moment and that, plus a slew of other rapidly rising commodity prices, is responsible for more than AUD 300 billion earned from raw material exports in the last year. So, we can’t be surprised that GBPAUD is flatlining around AUD 1.83.
The GBPNZD rate also remains trapped below its recent highs. Stronger than expected New Zealand employment data has helped the Kiwi Dollar to remain strong but, as Australia is NZ’s number one export market, good economic news in Oz is bound to reflect well on the Kiwi Dollar. So, having failed to breach NZD 2.00 to the Pound last week, the GBPNZD rate is stuck around NZD 1.96 this morning.
We lack any kind of meaningful data today, so we will have to take our cues from central bankers. Speakers from the ECB, Bundesbank, BOE and US Federal Reserve will all be in action today. Andy Haldane of the Bank of England is perhaps the most influential of these from a UK perspective. Sterling traders will pay attention.
Highlights for the rest of the week include the UK and Canadian GDP data on Wednesday, Eurozone inflation; also on Wednesday, and the Tankan business sentiment indices from Japan on Thursday as well as the Caixin manufacturing survey from China the same day. Thursday will also bring the UK and US versions of the Purchasing Managers Indices and Friday is dominated by the US employment report.
It is also the end of the Month, the Quarter and the Half-Year on Wednesday, so we will see some shuffling in the forex market. The same can be true of some derivative markets and markets in which traders and investors contract for difference.
And congratulations to Harlequins for their narrow win over Exeter Chiefs at the weekend. That was the best final I have seen since the 2003 World Cup Final (but that was other reasons). Such a shame that someone had to lose that game.