Corpay^

Global Reach is becoming Corpay Cross Border, part of FLEETCOR, to broaden our client offering. Please contact our team or visit corpay.com to find out more.

Pound slips below 1.30 on BoE interest rate speculation

GBP – More stimulus ahead?

The Pound experienced some weakness towards the end of last week after Bank of England Governor, Mark Carney, suggested that the policymakers may need to cut interest rates if UK data keeps painting a dismal picture. The central bank Chief said that the BoE was running low on tools to combat recessions and that recent months had seen sluggish UK growth. Carney said: 'If evidence builds that the weakness in activity could persist, risk-management considerations would favour a relatively prompt response.' However, the central bank mogul did also suggest that there had been some early signs of global growth stabilisation, and indications that there was less uncertainty since the election outcome. The Pound fell to reside at a two-week low versus the US Dollar after Carney's comments, while falling around 0.5% versus the Euro. This week, Sterling has begun on the back foot, falling below the 1.30 level versus the US Dollar for the first time this year on BoE rate speculation—the British currency is now almost 2% lower for the year. In the week ahead, there's a significant amount of data which could impact the Pound, including a raft of construction, manufacturing, trade balance, and growth figures this morning. Wednesday will see the highly influential UK inflation readings for December reach the market, while the BoE's Bank Liabilities/Credit Conditions Surveys will be out on Thursday. Retail Sales will follow on Friday. Additionally, any Brexit headlines could also impact Sterling. 

EUR – Manufacturing continues to slow

German Factory Orders data disappointed this week, creating Euro weakness. Expectations for both export orders and employment in the manufacturing sector have fallen after a poor end to 2019—something that could continue to weigh on the common currency. Eurozone manufacturing as a whole contracted for the 11th consecutive month in December, dragged down by the slowdown in Germany. It's a quiet start to the week for economic data, but German growth numbers will be published on Wednesday, as well as Eurozone Industrial Production data. Thursday will follow with German inflation, before Friday's overall Eurozone inflation reading for December. German data is in particular focus, given it's the Eurozone's largest economy and so-called powerhouse. A slowdown in Germany can be an indication of how the bloc is likely to perform overall.

USD – Easing tensions 

Last week, the easing of geopolitical tensions, namely the recent conflict between the US and Iran, saw safe-haven assets decline, and allowed the US Dollar to regain some ground. Friday's US Change in Non-Farm Payrolls report showed a weaker-than-forecast number at 145k, below the 160k expectation and the previous 256k. Average Hourly Earnings also took a tumble from 3.1% to 2.9%. US inflation data for December is due out on Tuesday, ahead of Retail Sales stats on Thursday, and confidence numbers on Friday, all of which are deemed highly influential and could create US Dollar movement.

AUD and NZD – Aussie and Kiwi soften 

Despite positive economic data last week, the Australian Dollar was trending lower as the ongoing bushfires cast a shadow on the economy—consumer confidence has also shown increasing concerns over economic growth. Due to their close proximity, the New Zealand Dollar was pulled down with the Aussie to soften against other majors.

There are a number of Australian data releases due out in the week ahead, but one of the most interesting to investors could be consumer confidence levels, released on Thursday. Meanwhile, investors in the Kiwi will be looking towards the latest New Zealand manufacturing figure on Thursday, following business sentiment numbers on Monday. 

CAD – Predicting monetary policy

The Canadian Dollar dropped to near two-week lows against the US Dollar towards the end of last week as markets awaited highly influential labour market data. The previous release had shown the shedding of 70,000 jobs, the largest number since the Global Financial Crisis, and markets were keen to see whether December had posted a recovery or not, to try and anticipate any action from the Bank of Canada. When the data was released, it showed an increase of 35.2k in December, beating the 25.0K forecast, while the Unemployment Rate dropped from 5.9% to 5.6%. It's a quiet week ahead for economic data, meaning the Canadian Dollar may be influenced more by market sentiment, geopolitical developments, and commodity prices such as oil. 

ZAR – Softer Rand

The South African Rand weakened against the US Dollar towards the close of the week after power cuts, unimpressive manufacturing figures, and weaker growth forecasts pressured the currency lower. South African Consumer Confidence figures will be out on Tuesday, while retail data will print on Wednesday. Meanwhile, the South African Reserve Bank will announce it's latest interest rate decision on Thursday—interest rates currently stand at 6.5%.