GBP outperformed amid a flurry of M&A activity, while commodity currencies are bolstered ahead of tomorrow’s BoC and RBNZ rate decisions
GBP has been the notable outperformer of the session, with GBP/USD finishing the European session firmly in the green after breaking above the 200DMA at 1.5355 in early trade after M&A news in the form of Amlin (LONDON:AML) being acquired by Mitsui Sumitomo (NYSE:SMFG). In addition, the EUR/GBP cross broke through the psychologically important 0.7300 handle.
The strength in GBP was originally observed after participants digested Mitsui Sumitomo acquired Amlin for GBP 3.5bln, and this worked in tandem with yesterday’s news that MBK purchased Tesco (LONDON:TSCO)'s (NASDAQ:TESO) South Korean business for GBP 4.2bln. Recent GBP strength comes ahead of the BoE rate decision on Thursday, where they are expected to maintain the 0.5% Bank Rate with a vote of 8 to 1, with some analysts noting risk to the downside given the recent developments on China
Elsewhere, commodity currencies such as CAD, AUD and NZD spent the day in the green, benefiting from strength in the commodities complex. WTI and Brent also improved upon recent weakness, helped by comments from the Iranian energy minister who said that they stood ready to do what was necessary to help the ailing oil market. Of note, this comes ahead of the BoC rate decision, in which 20 out of 21 analysts expect them to maintain rates, with one analyst forecasting a 25bps cut and the RBNZ rate decision in which all analysts predict a 25bps cut.
As well as the BoC and RBNZ rate decision, tomorrow sees both bank governors speak, UK industrial and manufacturing production and comments from ECB’s Praet at the Ecofi Conference in Luxembourg.