GBP/USD Hits New Lows Since November

GBP/USD hit new lows yesterday as trade war fears remained a key market driver. A Brexit bill vote, the ECB forum, and US trade fears are in focus.

Previous Day's Market Highlights

Sterling fell to a new low against the dollar since November, breaking below 1.32 and marking a drop of approximately 8.6% since mid-April’s post referendum highs. The dollar remained strong against both the pound and the euro, with euro-dollar again trading either side of 1.16 before moving lower towards 1.1540. Sterling-euro held above 1.14 for most of the day but gave up the key level in the afternoon session.
 
The economic calendar was again relatively light, leaving focus on global trade war concerns, which saw the yen initially gain as a safe haven and weighed on stocks, although losses were later pared. The uncertainty contributed to a 0.4% decline in the FTSE 100 and a 0.8% drop in the FTSE 250. THE DJIA fell over 1% and the S&P 500 by 0.4%. The CBOE Volatility Index hit a nearly three-week high.

Currency Pairing 08:00 Today Vs 08:00 Yesterday Four-Week High Four-Week Low % Change
GBP/EUR 1.1373 1.1498 1.1314 1.60%
GBP/USD 1.3155 1.3473 1.3144 2.44%
EUR/USD 1.1566 1.1853 1.1510 2.89%
GBP/AUD 1.7778 1.7970 1.7395 3.20%
GBP/NZD 1.9056 1.9455 1.8905 2.83%
GBP/CAD 1.7479 1.7550 1.7055 2.82%

Today's Market Highlights

Today marks the final day of the ECB’s forum on central banking, notably including a policy panel with ECB President Draghi, Fed Chair Powell, BoJ Governor Kuroda, and RBA Governor Lowe (14:30 BST). Any additional monetary policy clues could see currency reaction.
 
In the US, economic releases include the Current Account and Existing Home Sales. Markets will continue to eye the latest trade headlines. Relative dollar strength may continue although mixed data could see some weakness.
 
On the sterling side, the latest parliamentary vote on the Brexit bill poses a downside risk as a government defeat would increase speculation that May’s leadership may be in a tenuous position.
 
Tomorrow the Bank of England is expected to keep interest rates on hold. Investors will watch to see that the Bank leaves a rate hike later in the year on the table and parse the statement for any clues as to the timing of a potential move. The Bank will likely emphasise that its decision will be data dependent.

Today's Economic Calendar

Time Currency Release Consensus Previous
11:30am EUR ECB's Coeure Speaks
1:30pm USD Current Account $-129.0B $-128.2B
2:30pm USD Fed Chair Powell, BoJ Governor Kuroda, ECB President Draghi, and RBA Governor Lowe Speak
3:00pm USD Existing Home Sales MoM (May) 5.52M 5.46M
3:30pm USD EIA Crude Oil Inventories (15 June) -1.898M -4.143M
11:45pm NZD GDP QoQ (Q1) 0.5% 0.6%
11:45pm NZD GDP YoY (Q1) 2.7% 2.9%

Caxton