Pound Edges Lower as Michael Gove Attacks EU Reforms

Pound Sterling (GBP)
The mood towards the Pound has remained rather muted today as the ‘Brexit’ debate intensifies, with Justice Secretary Michael Gove calling into question the legally binding nature of proposed reforms to the UK’s relationship with the EU.
As Bank of England (BoE) Governor Mark Carney yesterday failed to rule out the possibility of UK interest rates being cut further there has been little incentive for traders to return to the softened currency, with no end to the current uncertainty in sight.
Tomorrow’s fourth quarter UK GDP report is expected to see Pound Sterling lose further ground to its rivals, with forecasts suggesting that growth at the end of last year is set to be revised downwards.
During the European session the interbank Pound Sterling to Euro (GBP/EUR) exchange rate was in the region of 1.2679.

Euro (EUR)
Confidence in the Euro has continued to weaken on Wednesday as markets lack any fresh Eurozone economic data to assuage concerns over the longer-term outlook of the currency union.
The finalised Eurozone Consumer Price Index for January is predicted to see an upwards revision from 0.2% to 0.4%, suggesting stronger inflation and potentially reducing the case for further European Central Bank (ECB) policy easing.
During the European session the interbank Euro to Pound Sterling (EUR/GBP) exchange rate was in the region of 0.7889.

US Dollar (USD)
The US Dollar has been on stronger form against the majors today in spite of February’s Consumer Confidence reading sliding further than expected from 98.1 to 92.2.
While the Federal Reserve are looking increasingly unlikely to meet their previous goal of four interest rate hikes over the course of 2016 this hasn’t dented the appeal of the US Dollar, which is benefitting from renewed safe-haven demand.
This dominant run is likely to continue if Thursday’s Durable Goods Orders shows the expected strong improvement in demand.
During the European session the interbank Pound Sterling to US Dollar (GBP/USD) exchange rate was in the region of 1.3921.

Australian Dollar (AUD)
With market optimism in decline and an unexpected fall in the Australian Wage Cost Index, from 2.3% to 2.2%, the Australian Dollar has been pushed lower.
Thursday could see the fortunes of the ‘Aussie’ pick back up, however, as Private Capital Expenditure is predicted to have contracted less severely in the fourth quarter, which would suggest an improved level of confidence within the Australian economy.
During the European session the interbank Pound Sterling to Australian Dollar (GBP/AUD) exchange rate was in the region of 1.9489.

New Zealand Dollar (NZD)
With fresh domestic data lacking on Wednesday the New Zealand Dollar has been buffeted by increasing market risk aversion, as concerns persist that the Reserve Bank of New Zealand (RBNZ) will be prompted to cut interest rates imminently.
January’s New Zealand Trade Balance is due tomorrow, which is expected to show that the trade deficit widened from -35.4 billion to -38.7 billion New Zealand Dollars.
During the European session the interbank Pound Sterling to New Zealand Dollar (GBP/NZD) exchange rate was in the region of 2.1074.

Canadian Dollar (CAD)
After the Saudi Arabian Oil Minister reiterated that OPEC will be not be implementing oil production cuts the value of crude has headed back towards the $32 per barrel mark.
In spite of this, the Canadian Dollar has been making fresh gains against some of the majors ahead of comments from Bank of Canada (BOC) Deputy Governor Lawrence Schembri.
During the European session the interbank Pound Sterling to Canadian Dollar (GBP/CAD) exchange rate was in the region of 1.9280.