Sterling as wet as August was…
German unemployment data, released yesterday came in below par, but that was not enough to stop the single currency’s gains against Sterling for the morning session, but these slight gains all but receded by the close of play. Meanwhile, the Greenback strengthened versus Sterling yesterday as Investors still have confidence in the Federal Reserve increasing the headline interest rate before the year is out. However, the downfall in global sentiment over the past two weeks made this very far from a predictable conclusion. Comments from US policymakers at the Jackson Hole economic conference over last weekend revealed a selection of views on the timing of an interest rate hike, with one primary member even publically calling for a further relaxation in policy.
With the exclusion of the high-yielding Dollars such as NZD, AUD and CAD, Sterling has been the hit the worst of the sixteen most traded currencies by the slump in investor sentiment. A month ago, with guidance from the Bank of England (BoE) Governor Mark Carney, investors were factoring in a UK interest rate hike for the start of the New Year. The slump in appetite for risk in Asia has postponed the next BoE tightening of monetary policy in the minds of market participants.
The Canadian economy also got a push in the right path in yesterday’s afternoon session, when June Gross Domestic Product data significantly beat expectations. A year-on-year showing of 0.6% was well ahead of what was anticipated by the market and the Canadian Dollar gained against Sterling as a result. The Canadian tender continues to be weighed down heavily by bargain basement wholesale crude oil prices.