Sterling Rises on Hopes of Rate Hike
Sterling kept gaining ground against the US Dollar and the Euro for a second day as investors and economists have turned their attention to Thursday’s Bank of England (BoE) monetary policy meeting. Speculation on a rate hike by the BoE’s Monetary Policy Committee (MPC) has helped the Pound rise. In the continent, the news that the Eurozone economy expanded by 0.6% in the third quarter of 2017 boosted analysts’ belief that it could outpace US economic growth for a second year in a row.
In the US, Donald Trump’s former policy adviser George Papadopoulos pled “guilty” to lying to FBI investigators over his contacts with people close to the Russian government. Paul Manafort, Trump’s former election campaign manager, has been confined to his home after he pled “not guilty” for a series of offences. In Japan, the central bank decided to keep its monetary policy unchanged.
Pound Sterling – UK Markets
Today, the Pound strengthened against the US Dollar with the exchange rate set at $1.32. Sterling edged up against the Euro with the exchange rate set at €1.13. The British currency kept strengthening against its two main rivals as the Bank of England’s (BoE) monetary policy meeting on Thursday is approaching.
A report by the BBC said that the BoE believes that up to 75,000 people could lose their jobs in the UK’s financial sector, after the country exits the European Union. BoE officials have asked from banks and other financial services to provide information regarding their contingency plans, in case there would be a “hard Brexit.” However, despite the possibility of jobs being lost in the aftermath of a “hard Brexit,” the BoE said that new opportunities could emerge from rising market economies across the world.
GfK Group, a market research firm, published data regarding its monthly consumer confidence index, which came in at -10, in line with expectations. October’s figure is very close to a three-year low. The survey showed that British consumers are still keen on spending on expensive items. GfK analysts noted that “as concerns about the wider economic prospects for the UK economy dampen our outlook, consumers are showing no real ‘get up and go.’ Surging credit card use is fuelling spending at the expense of saving, which is [sic] growing at the slowest pace since 2008.”
US Dollar – US Markets
The US Dollar strengthened against the Euro with the exchange rate set at €0.85. The US Dollar Index (DXY) remained stable at 94.55.
A Bloomberg News report said that House tax-writers are discussing a gradual phase-in for the corporate tax reduction that President Trump has promised to include in the tax reform. If this way of reducing the corporate tax would be selected, it would reach the promised 20% level by 2022. Sarah Sanders, who is the White House Press Secretary, denied that the President’s opinion on this matter has changed saying that “the President has laid out his principles and it doesn’t include phasing-in. I don’t have reason to believe we have any changes on that front.”
The National Association of Realtors announced that the share of sales to first-time buyers fell to 34% in 2017, down from 35% in 2016. The historical records show that first-time buyers make up the 40% of homebuyers. The share of first-time homebuyers, having a student loan, increased. Most of the new buyers complained that their student loan delayed their saving for a down payment.
Euro – European Markets
The Euro dropped against the US Dollar with the exchange rate set at $1.16. Eurostat released data regarding inflation, unemployment rate and GDP growth in the Eurozone and for some of its member countries.
The Eurostat report showed that the Euro-bloc economy expanded by 0.6% in the third quarter, on a quarterly basis. On an annualised basis, the Eurozone economy grew by 2.5%, surpassing analysts’ expectations. The unemployment rate in September fell to 8.9% from the 9.0% figure recorded in August. Inflation came in at 1.4% in October. Analysts were expecting that Eurozone inflation to remain stable at 1.5% as it had been in September.
A report published by the INSEE showed that the French GDP grew by 0.5% in the third quarter of 2017. This is the fifth consecutive quarter that the French economy is expanding. INSEE analysts noted that consumer spending and business investment were the main reasons for the result, which shows that the French economy is back on track of becoming as competitive as the German one.
Other Currencies – Highlights
Sterling inched higher against the Australian Dollar, trading just under the 1.72 AUD mark. The Senate’s President Stephen Parry informed the government that he will resign if it’s proven that he is also a British citizen. Parry has sought advice from the British authorities. If he is also a British citizen, he would be the eighth member of Parliament involved in the citizenship scandal.
The Pound jumped against the New Zealand Dollar, trading at 1.93 NZD. Prime Minister Jacinda Ardern announced that the government has found a way to block non-resident foreigners from buying existing homes without clashing with the free trade agreements that New Zealand has signed with other countries. Ardern assured permanent foreign residents or holders of a resident-class Visa that they will have the right to buy a home, since they legally reside in the country.
Sterling inched lower against the Japanese Yen, trading at ¥149.40. The Bank of Japan (BoJ) Governor, Haruhiko Kuroda said after the bank’s monetary policy meeting, that the Japanese economy is expanding moderately. Kuroda described as “nonsense” the idea of tightening monetary policy now in order to deal with future risks.