Will Carneys speech support or scupper pound sterling exchange rates?

The gains recorded by the pound on Monday proved short lived,

with Sterling going on to slide against most the majors as the week continued.

GBP/EUR has drifted to €1.1304, GBP/USD has fallen back below US$1.3400. GBP/AUD is trading in the region of AU $1.7458, GBP/NZD is static at NZ$1.9198, and GBP/CAD is fluctuating around C$1.7213.

Keep scrolling to find out what news is most likely to move the major currencies today…

What’s been happening?

After starting the week fairly well, Sterling was pressured lower on Tuesday thanks to comments from Michel Barnier, the EU’s chief negotiator.

Barnier reiterated the fact that the UK’s financial services sector won’t receive preferential treatment once the nation leaves the single market.

He stated; ‘There is not a single trade agreement that is open to financial services. It doesn’t exist… In leaving the single market, [the UK] loses the financial passport.’

The pound drifted to a 14-day low against the euro despite disappointing data from Germany.

The ifo business climate index dipped from 117.6 to 117.2 while the expectations measure stumbled from 111 to 109.5.

Meanwhile, high hopes that US President Donald Trump’s tax bill will be passed into legislature saw the GBP/USD exchange rate give up a third of a cent.

Sterling did manage to surge against the New Zealand dollar, however, as the currency was battered by a concerning slide in the price of dairy produce – New Zealand’s key commodity.

Dairy prices plummeted by -3.9% at the latest Global Dairy Trade auction, and the dip inspired broad-based NZD losses.

What’s coming up?

The main UK news to focus on today is a speech by Bank of England (BoE) Governor Mark Carney.

If, during his speech to Parliament, Carney appears optimistic about recent Brexit developments, the pound could climb.

However, if Carney is cautious about the UK’s outlook and weighs on hopes for borrowing costs increasing sooner than currently forecast, Sterling is likely to extend yesterday’s losses.

Positive developments in the US tax cut situation would also weigh on the GBP/USD exchange rate.

According to Lloyds; ‘The US House of Representatives and the Senate voted in favour of the tax reform bill, which provides significant tax cuts including a reduction in the headline corporate tax rate to 21% from 35%. However, a technicality means that the House will vote on it again later today. The bill is expected to pass and will be sent to President Trump to sign into law.’