POUND STERLING
Sterling showed red across the board for the majority of the day as UK data releases increased the gloom regarding Britain’s recovery. Industrial Production figures showed that the UK’s manufacturing output contracted significantly in April, whilst Producer Price data showed that input costs for UK factories are dropping, suggesting that UK inflation may be set to recede. NEAR-TERM OUTLOOK – NEUTRAL TO NEGATIVE.
US DOLLAR – The Pound Dollar exchange rate (GBP/USD) is 1.6249
Global stocks have edged lower on the day as investors scale back their appetite for risk following last night’s weaker-than-anticipated Chinese Trade Balance figure for May. However, with tonight’s monthly Budget Statement expecting to show that the US deficit increased by over $150bn in May alone, support for the Greenback may drop-off before the weekly close. NEAR-TERM OUTLOOK – NEUTRAL.
EURO – The Pound Euro exchange rate (GBP/EUR) is 1.1311
This morning’s German CPI inflation data came in as per expectations, confirming that German prices are rising in Europe’s powerhouse economy at a rate above the level which the ECB is comfortable with. French Industrial Production figures also released this morning surprised the markets by showing a contraction in factory output in April, however on balance a July rate hike looks likely from the ECB. NEAR-TERM OUTLOOK – NEUTRAL TO POSITIVE.
AUSTRALIAN DOLLAR – The Pound Australian Dollar exchange rate (GBP/AUD) is 1.5399
With no Australian data releases today, the Aussie struggled to make up any ground against the other majors following its positive day yesterday. The Kiwi continued to pick up support at the expense of the Aussie as fund managers shifted their holdings across the Tasman due to reduced appetite for risk. This caused the AUD NZD rate to fall by 0.50% during Europe’s afternoon session. NEAR-TERM OUTLOOK – NEUTRAL.
NEW ZEALAND DOLLAR – The Pound New Zealand Dollar exchange rate (GBP/NZD) is 1.9766
The Kiwi Dollar continued its march forward as appetite for risk fell away in global markets. The NZD is increasingly behaving as a reserve currency, particularly compared to its Australian sister currency and has picked up ground as stock markets have faltered over the last two trading days. The GBP NZD rate traded below the 1.97 level for the first time in many years. NEAR-TERM OUTLOOK – POSITIVE.
NORWEGIAN KRONE – The Pound Norwegian Krone exchange rate (GBP/NOK) is 8.9052
The price of a barrel of West Texas Intermediate Crude is down by over two percent on the day, causing the NOK to lose ground against most other majors. However, reports yesterday confirming that Norway’s Sovereign Wealth Fund the Government Pension Fund Global, is the biggest fund of its kind in the world, will remind investors that the NOK’s bull run of recent years may have further to go.NEAR-TERM OUTLOOK – NEUTRAL TO POSITIVE.
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