Pound softens as new Ministers talk no-deal Brexit

GBP – Bank of England interest rate decision ahead 

The Pound has hit a two-year low against the US Dollar this morning at interbank levels of 1.2335. Sterling fell after political statements from new Ministers at the weekend regarding a no-deal Brexit. The Pound has also softened against the Euro, reaching lows this morning of 1.1127. There are a few events which could impact the GBP exchange rate this week, including Consumer Confidence data on Tuesday, manufacturing numbers and the Bank of England’s (BoE) interest rate decision, Inflation Report, and press conference with the central bank’s Chief Mark Carney on Thursday. 

EUR – Further signs of a slowdown ahead 

The Euro has been softer against some other currency majors in recent weeks as Eurozone growth slows and the European Central Bank (ECB) indicated that it would cut rates to support the economy. Last week central bank President Mario Draghi said that the outlook was worsening, and also commented on inflation being significantly below target. Wednesday could be one of the most influential days for Euro movement this week given the amount of data due for release. German and Eurozone unemployment data will reach markets, as well as the highly influential Eurozone inflation and growth figures, which are expected to fall. 

USD – Fed rate decision ahead

The US Dollar has been strengthening in the past week, but upcoming central bank developments could influence the currency’s movement in the week ahead. Wednesday will likely be the main event for the US Dollar in terms of the economic calendar. The Federal Reserve will announce its latest interest rate decision, with most economists forecasting a cut in interest rates. The follow-up press conference with Federal Reserve Chair Jerome Powell will be closely watched, and likely be a source of US Dollar movement if any indication of the future rate path is revealed amid a backdrop of global easing. 

AUD and NZD – Rate cuts expected

The Australian Dollar experienced some weakness last week after the Reserve Bank of Australia (RBA) Governor Philip Low suggested that interest rates would be kept low for ‘an extended period’, which caused markets to price in more rate cuts. Meanwhile, the New Zealand Dollar is treading water ahead of central bank decisions. An interest rate cut by the Federal Reserve could impact the Aussie and Kiwi Dollars, and next week’s Reserve Bank of New Zealand (RBNZ) meeting will be in sharp focus with more cuts expected. The Aussie Dollar could experience some movement on Wednesday when the latest Australian inflation reading is released. Inflation is expected to rise from 1.3% to 1.5% in the second quarter of the year, which may offer the AUD exchange rate some support. It’s a quiet week ahead for New Zealand data, but the moderately influential Building Permits stat out in Tuesday’s Trans-Tasman session, and Wednesday’s Activity Outlook could provide some direction for the Kiwi Dollar. 

CAD – Loonie strength continues

Last week, the Canadian Dollar hit a one-month low against its US Dollar counterpart in its second consecutive week of declines after US data supported the Buck. Wednesday will reveal the latest Canadian growth numbers for May, with forecasts suggesting a decrease from 1.5% to 1.3% on the year. The month is only expected to show 0.1% growth. Meanwhile, Thursday will bring the latest manufacturing data to the table; June’s reading was in contraction territory, any rise out of this area with a reading above 50.0 could offer the Loonie exchange rate some support, while any reading below could pressure it lower.