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8th February 2017 - Exchange Rates News written by TorFX for Exchange-Rates.com

8th February 2017 News: Hawkish Comments from Bank of England's (BoE) Kristin Forbes sends GBP Soaring

Pound Sterling (GBP)

After fluctuating for much of the day, the Pound made a solid advance on Tuesday evening as bets of a Bank of England (BoE) interest rate hike increased.

Tuesday afternoon saw hawkish comments issued by Bank of England (BoE) policymaker Kristin Forbes. She stated that she would support a UK interest rate hike in the foreseeable future if inflation looks to keep surging and the economy continues to be solid. This contrasted significantly with the bank's official view that monetary policy should be kept ultra-low to defend against economic instability during the Brexit process. As a result, Sterling surged.

Evening news that UK Brexit Minister David Jones indicated MPs would get to vote on bills that covered Brexit withdrawal arrangements as well as future UK-EU relations also supported the Pound. However, Jones did imply that if Parliament rejects the government's Brexit bill it could lead to Britain leaving the EU with no trade deal at all.

US Dollar (USD)

The Pound to US Dollar exchange rate was able to reverse its losses on Tuesday evening after slumping for most of the day's European session on a stronger US Dollar.

Hawkish comments from Philadelphia Federal Reserve President Patrick Harker stated that he would support a US interest rate hike as soon as March. Despite March rate hike bets being relatively low among traders, this sentiment from Harker led to improved expectations and a stronger US Dollar. USD was unable to stand firm against the Pound's evening bullishness however.

Euro (EUR)

The Pound to Euro exchange rate surged on Tuesday evening due to hawkish comments from Bank of England (BoE) policymaker Kristin Forbes.

The Euro, on the other hand, remained weak throughout the day due to a lack of fresh supportive ecostats, as well as lasting concern about this year's political outlook for the Eurozone. Concerns are rising that French far-right Presidential candidate Marine Le Pen could win the election this year and take France out of the Eurozone.

This week's comments from European Central Bank (ECB) President Mario Draghi also weakened the Euro, as he indicated that the bank's aggressive quantitative easing (QE) program could be extended into 2018 if need be.

Australian Dollar (AUD)

The Pound to Australian Dollar exchange rate slipped in early Tuesday trade as the Reserve Bank of Australia (RBA) left monetary policy frozen and adopted a hawkish outlook on the economy. As a result, RBA rate cut bets plunged and the Australian Dollar strengthened despite the low demand for risky currencies throughout the day.

However, the 'Aussie' was unable to hold back the bullish Pound on Tuesday evening and by Wednesday morning GBP/AUD trended a cent above the week's opening levels.

New Zealand Dollar (NZD)

The Pound to New Zealand Dollar exchange rate initially slipped on Tuesday as New Zealand inflation expectations rose from 1.7% to 1.9% and led to investors buying up the 'Kiwi'. Investors were also encouraged to buy NZD after the day's Global Dairy Trade (GDT) auction, which saw prices of New Zealand's most lucrative commodity improve by 1.3%.

GBP/NZD surged on Tuesday evening in response to higher BoE rate hike bets, but when Asian markets open on Thursday morning all eyes will be on the Reserve Bank of New Zealand's (RBNZ) first monetary policy meeting of the year as well as the press conference with RBNZ chief Wheeler.

Canadian Dollar (CAD)

The Pound to Canadian Dollar exchange rate surged on Tuesday as Sterling strengthened on hawkish Kristin Forbes comments while the Canadian Dollar was weakened by the latest in oil news.

Concerns continue to grow that US oil supplies will spike and that American oil producers will continue ramping up production. As a result, prices of Canada's most lucrative commodity have slipped despite OPEC's oil production cut plans.

Disclaimer: This update is provided by TorFX, a leading foreign exchange broker, its content is authorised for reuse by affiliates.

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