GBP - British Pound
Positive British wage data lead to a push-back from Sterling against the Euro. This was much needed relief for the pound after a string of negative technical data has weighed heavily on investor sentiment, leading to what many believe is an undervalued position for the British currency. Wage growth is once again outstripping inflation and the Bank of England have hinted that it will need to hike interest rates sooner than initially expected in order to maintain their 2% inflation target.
Boris Johnson once again made headlines as he is due to announce his hardline Brexit campaign on Wednesday. ‘Delay means defeat’ he warned his Tory peers, implying he is going to conduct negotiations in a completely different manner to Teresa May, who was widely criticized for the soft approach she took. In contrast to May, who was able to secure multiple extensions to her initial 29th March deadline, Johnson is expected to announce that Britain will exit the European Union on Oct. 31, come what may. It is widely accepted that a no deal Brexit is negative for the British currency, at least initially until the UK form trade deals elsewhere.
Focus fell once again on remarks made by President Trump, who despite previous claims, said he is personally holding up the ongoing trade war with China. Trump claimed that he will hold strong and continue to implement tariffs until Beijing returns to the terms negotiated earlier in the year. Trump also tweeted ‘The Euro and other currencies are devalued against the dollar, putting the U.S at a big disadvantage’ on Tuesday. This came just before he complained about the U.S interest rates being too high. This leads many believing the Fed will accelerate their interest rate cutting process. More will be known at the next policy meeting on June 18-19.
The Aussie Dollar and Kiwi were the worst performing G10 currencies on Tuesday, as investors turned cautious in light of negative data coming from the Australasian economies.
All eyes turn to ECB President Draghi’s talk at the ECB conference and US monthly inflation later on Wednesday.