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Budget, Brexit, and the BoE are the Pound’s main focus points


Pound - GBP 

Carney's comments ahead

Last week, the Pound to US Dollar (GBP/USD) exchange rate broke below the 1.29 barrier as the Greenback strengthened and Brexit weighed on Sterling. The Pound to Euro (GBP/EUR) exchange rate also broke below 1.12. One of the main events for Sterling this week will be Thursday’s Bank of England (BoE) interest rate decision. Although the rate is likely to remain on hold, the comments from BoE Governor Mark Carney in the follow-up press conference could be influential for Sterling. Last week, the central bank mogul dampened expectations for an interest rate hike in May, due to recent economic data. One of Carney’s most prominent concerns is the outcome of Brexit negotiations and keeping the economy stable. Another big event this week will come in the form of Monday’s budget announcement as investors look for some post-Brexit insight.

Euro - EUR

Euro struggles with political uncertainty

Last week, the European Central Bank (ECB) unsurprisingly chose to keep interest rates on hold. However, ECB Chief Mario Draghi spoke saying that he felt ‘confident’ that Italy and the European Commission would come to an agreement on the budget. This week, the Euro is struggling to remain above the 1.1400 level against the US Dollar (EUR/USD) as the Italian budget debate continues to create pressure on the single currency, along with fears over the fate of German politics. Tuesday will see the release of German unemployment data and Italian and Eurozone growth figures, while Wednesday will bring with it the latest Eurozone inflation numbers.

US Dollar - USD 

US labour market data ahead

The US Dollar was able to strengthen at points last week after weakness in other currencies and some positive domestic data. Last week showed the US Durable Goods Orders had risen by 0.8% in September, rather than contracting by the -1.5% expected. Additionally, the previous month had a positive revision to a healthy 4.6%. The latest annualised Gross Domestic Product (GDP) number also printed better than economists had expected, reaching 3.5% in the third quarter from the previous quarter’s 4.2%, rather than the 3.3% forecast. The big event for the US Dollar this week will be Friday’s US Change in Non-Farm Payrolls stat and the Unemployment Rate figure which will indicate the strength of the US labour market. 

Australian Dollar - AUD 

Australian inflation expected to fall

The Aussie has had a rough time of late and has been trading near two-and-a-half-year lows after its largest trading partner, China, produced some weak economic data. Both the Aussie and the Kiwi Dollars have been on a downward trajectory versus their US counterpart this year on account of diverging monetary policy. While the US is hiking rates, the antipodean nations have been standing pat for some time. Wednesday could be an interesting day for the Aussie Dollar when the latest Australian inflation reading reaches markets. A slight fall is predicted in the third quarter on the year, from 2.1% to 1.9%, which may create some pressure on the AUD exchange rate.

New Zealand Dollar - NZD

Kiwi regains some ground

The New Zealand Dollar had a sharp decline last week as global market sentiment dropped on stock market volatility. However, Friday saw the Kiwi currency rise against the US Dollar (NZD/USD) as rumours China’s central bank could intervene in currency markets reached investors. It’s a relatively quiet week ahead for the New Zealand Dollar regarding economic data, but Tuesday will see the release of the moderately influential Building Permits stat, followed by Wednesday’s ANZ Activity Outlook. Business and Consumer Confidence figures will also be revealed.

Canadian Dollar - CAD

Canadian growth numbers ahead

The Canadian Dollar hit a six-week low last week against the US Dollar (CAD/USD) on Friday, despite enjoying a boost earlier in the week when the Bank of Canada (BoC) hiked interest rates. There are a few key events which might impact the Canadian Dollar this week. The August Canadian Gross Domestic Product (GDP) figure will be out on Wednesday with expectations to remain at 2.4% on the year. Meanwhile, Thursday will bring with it the Canadian Manufacturing Purchasing Managers’ Index (PMI) and high-tier labour data is due out on Friday. The Canadian Unemployment Rate is predicted to remain at 5.9% in October, while the Change in Employment stat is expected to show an additional 12.5K people in employment that month—a slightly lacklustre reading in comparison to the previous month’s 63.3K.