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Although the pound failed to recover losses against the euro on Tuesday, the currency did manage to return to multi-month highs against the US, Australian, Canadian and New Zealand dollars.
GBP/EUR spent most of the day below the €1.1750 level, GBP/USD rallied from $1.2803 to $1.2843, GBP/AUD advanced to AU$1.7105 (close to 2017 highs), GBP/NZD surged from NZ$1.8349 to NZ$1.8581 (its best levels since August 2016) and GBP/CAD achieved a high of C$1.7488.
What currency movement is on the cards today? Keep scrolling to find out…
What’s been happening?
After last week’s significant pound gains the last few days have proven quite tame in terms of currency movement.
The euro was still riding high on Tuesday on the back of the outcome of the first round of the French general election and GBP/EUR recorded further losses.
However, the pound was able to advance on some of the other majors after UK data showed that Chancellor of the Exchequer Philip Hammond had hit his budget target for the 2016/2017 financial year. Although public sector net borrowing increased by more-than-expected in March, over the year as a whole it was down 28% on 2015/2016.
In fact, borrowing was at its lowest level since before the global financial crisis in 2008.
This, in combination with a drop in US consumer confidence, helped the pound climb against its US rival.
Sterling’s gains against the Canadian dollar, Australian dollar and New Zealand dollar were also the result of developments in the US.
A lumber dispute between the US and Canada sent the Canadian dollar lower and increased concerns of trade disputes developing between the US, Australia and New Zealand.
The Australian dollar came under further pressure after domestic inflation figures proved lower than forecast in the first quarter of 2017.
What’s coming up?
The UK data calendar is light again today, with no notable reports to be aware of.
The US is set to release MBA mortgage application figures and crude oil inventories numbers, and Canada will be publishing its retail sales stats from February.
However, the main cause of currency movement in the hours ahead could be President Donald Trump’s meeting about North Korea. All senators have been called to attend the unusual gathering at the White House later today, although at the moment the agenda remains uncertain.
Trump’s hotly-anticipated tax proposals are also due to be divulged. If they are viewed as having the potential to bolster the US economy, the US dollar could rally.
According to Lloyds; ‘Reports suggest that he plans to unveil tax cuts, including a 15% corporation tax rate, and a 10% repatriation tax on companies’ stockpile of overseas earnings, although a border-adjustment tax may not be forthcoming. These measures were discussed with Congressional leaders yesterday, some of whom may question whether the proposed fiscal measures are revenue neutral.’
