BoE Governor Carney: ‘Profound Uncertainties’ Leave Pound Sterling Chinese Yuan (GBP/CNY) Exchange Rate Flat

August 1, 2019 - Written by John Cameron

STORY LINK BoE Governor Carney: ‘Profound Uncertainties’ Leave Pound Sterling Chinese Yuan (GBP/CNY) Exchange Rate Flat

Pound Chinese Yuan (GBP/CNY) Exchange Remained Muted as BoE Leaves Rates Unchanged

The Pound Sterling Chinese Yuan (GBP/CNY) exchange rate remained muted and the pairing is currently trading at an inter-bank rate of ¥8.3771.

On Thursday, the Bank of England (BoE) policymakers voted unanimously to leave interest rates unchanged at 0.75%.

However, the bank slashed its growth forecasts amid the growing risk of a no-deal Brexit.

The BoE downgraded it forecasts to 1.3% growth for both 2019 and 2020 providing the UK avoids a disorderly exit from the European Union.

Sterling sentiment slumped as this was down from May’s predictions of 1.5% and 1.6% growth in 2019 and 2020.

Speaking after the announcement, BoE Governor, Mark Carney said:

‘Profound uncertainties over the future of the global trading system and the form that Brexit will take are weighing on UK economic performance.

‘Until they are resolved, shifting perceptions of these factors will drive volatility in market interest rates, equity prices and currencies’ values.’

Chinese Yuan (CNY) Slides as Trade Tensions Batter Manufacturing Sentiment

This morning, the Caixin manufacturing PMI data revealed that China’s manufacturing sector was largely stable at the start of Q3 2019.

July’s manufacturing PMI came in at 49.9, improving slightly from June’s reading of 49.4.

The Yuan was provided with an upswing of support as business confidence rebounded from June’s all-time low to a three month high.

However, ongoing trade tensions between the US and China continue to batter overall sentiment and the index was left in contraction territory.

Commenting on today’s data, Dr. Zhengsheng Zhong, Director of Macroeconomic Analysis at CEBM Group noted:

‘China’s manufacturing economy showed signs of recovery in July. Business confidence rebounded, reflecting the strong resilience in the economy. Policies such as tax and fee reductions designed to underpin the economy had an effect. The situation may strengthen policymakers’ insistence to regulate the property market and the finance industry.’

Further US-China Trade Talks Scheduled for September

On Wednesday, US and Chinese officials ended a brief round of trade talks in Shanghai that concluded with little sign of progress.

However, the talks were labelled as ‘constructive’ by Beijing and an agreement for further talks was reached.

On Thursday, the Chinese Commerce Ministry revealed the next round of face-to-face talks were scheduled to continue in September.

It also added that the teams are preparing ‘good groundwork’ for the up-coming in-person talks.

Pound Chinese Yuan Outlook: Will Better than Expected Construction PMI Buoy GBP?

Meanwhile, looking ahead to Friday, the Pound (GBP) could rise against the Chinese Yuan (CNY) following the release of the UK’s construction PMI.

If July’s PMI rises higher than forecast revealing the construction sector recovered slightly after the previous month’s slump, it could buoy Sterling.

Looking ahead to Monday, the Chinese Yuan could rise against the Pound following the release of the Caixin services PMI.

If July’s services PMI rises higher than expected, the Pound Chinese Yuan (GBP/CNY) exchange rate could slide.

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TAGS: Daily Currency Updates