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Archive | Pound Exchange Rates News

GBP Surges To Highs and Possible Yen Intervention

Another bullish week for GBPUSD ended with a strong second half pushing the rate up to the high of early February 2016. Ending the week at 1.4610, this was sharply higher from the low of 1.4400 on Monday, and bodes well for the British Pound in the coming weeks.

Whilst there was some disappointing data, including consumer confidence coming in lower at -3, the slide in the US Dollar along with strength in Japanese Yen meant that Sterling was able to gain ground and push on towards the 2016 high.

The strength in Yen is putting pressure on the Japanese economy, with Japans finance minister stating they may have to take action as the situation is worrying. Japanese Finance Minister Taro Aso stated:

“The yen strengthened by five yen in two days. Obviously one-sided and biased, so-called speculative moves are seen behind it, It is extremely worrying. Tokyo will continue watching the market trends carefully and take actions when necessary,”

The strength in Yen is hitting Japan’s exporters hard, Toyota and Sony, two of Japan’s heavy weight exporters, are feeling the pinch. Goods will become more expensive overseas, and limits the profits of these giants.

The hints are string from Aso that they could intervene in the currency market to stop the steep rise.

Stateside, the Federal Reserve opted to leave interest rates unchanged, but left the door open to a possible rate hike in June. Whilst a muted response in the markets initially, the US Dollar began to slide toward the end of the week, and Gold flew higher on the news.

The coming week is another big one in the United States, with ISM Manufacturing Data out on Monday, and Non-Farm Payroll Data due on Friday. During the week leading up to Non-Farm data, the markets can be subdued, but often spring into action as the weekend approaches.

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UK Unemployment Falls and Pound Responds

The surprising slide in the UK’s unemployment rate gave the Pound a notable boost on Wednesday and the British currency was able to carry these gains through to Thursday. Both the GBP/EUR and GBP/USD exchange rates were trending in a stronger position, with investors speculating that the erosion of slack in the UK’s labour market could outweigh inflation concerns and prompt the Bank of England (BoE) to adjust policy sooner rather than later. With UK data lacking today Pound movement may be limited.

US Dollar

Bets that the Federal Reserve will need to wait until 2016 before adjusting borrowing costs were further supported on Thursday as the annual rate of US inflation printed at an underwhelming 0.0%. Although the core measure of consumer price gains did rise to 1.9% the result wasn’t cheery enough to give the US Dollar much of a boost. For the ‘Greenback’ to rally today, the US University of Michigan Confidence Index will need to print strongly. Economists have forecast that the measure will rise from 87.2 to 89.0.

Euro

Comments from European Central Bank (ECB) policymaker Ewald Nowotny put the Euro under pressure on Thursday and saw the common currency slide against both the Pound and US Dollar. Nowotny asserted that it was ‘obvious’ the ECB needs to be doing more to stimulate growth in the currency bloc. This was taken as a sign that the central bank is preparing to expand quantitative easing, a development which would likely undermine demand for the common currency. Today’s trade balance and final inflation figures for the Eurozone are likely to have an impact on the Euro’s performance.

Australian Dollar

The prospect of US borrowing costs remaining lower for longer helped the Australian Dollar shake off the impact of a slightly disappointing domestic employment report and retain previous gains against several of its rivals. However, concern that the Reserve Bank of Australia (RBA) could have further rate cuts in mind have caused the ‘Aussie’ to soften against the Pound before the weekend.

New Zealand Dollar

Like the Australian Dollar, the New Zealand Dollar came under selling pressure overnight, with investors profit taking following the ‘Kiwi’s recent surge. New Zealand’s third quarter inflation data printed more strongly than forecast, with consumer prices being up 0.4% on the year in the third quarter rather than the 0.3% forecast, but the report had little positive impact on the New Zealand Dollar.

Canadian Dollar

The Canadian Dollar managed to post a modest gain against the Pound on Thursday in spite of Canadian Existing Home Sales data showing a -2.1% decline and oil prices easing. Today’s Canadian Manufacturing Shipments report could weigh on the ‘Loonie’ however if it shows the -1.0% month-on-month decline forecast by economists.

South African Rand

Before the weekend the Rand was preparing to fight its way back under the 13 Rand per Dollar level as Fed interest rate hike expectations kept demand for the ‘Greenback’ limited. South African data has been lacking this week but next week Rand volatility is likely to occur in response to the nation’s inflation and retail sales reports.

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Pound Makes A Response To Production Figures

After trending in a weaker position against peers like the Euro and US Dollar at the beginning of the week, the Pound staged an impressive rebound on Wednesday following the publication of the UK’s latest Industrial and Manufacturing Production figures.

Industrial Production was shown to have increased by 1.0% on the month, smashing forecasts for a 0.3% rise and contributing to a better-than-expected annual figure of 1.9%. Manufacturing Production was also up by more-than-projected on the month, although the annual figure fell short. Sterling rallied to a high of 1.3635 against the Euro after the data was released and was left trending above 1.53 against the US Dollar.

However, the Pound’s gains were tempered later in the day as the National Institute of Economic and Social Research published its GDP estimate for the three months through September. Growth of 0.5% was posted, marking a slowdown from the 0.7% expansion recorded in the second quarter of the year. However, NIESR did remark; ‘This slight softening in the third quarter is expected to be temporary. It is consistent with our latest forecast for the year as a whole.’

A subpar RICS House Price Balance report also weighed on the Pound on Thursday.

Although today’s Bank of England (BoE) policy meeting isn’t expected to inspire much excitement, the minutes from the gathering will be closely attended to. If the nine members of the Monetary Policy Committee (MPC) were divided on when to increase borrowing costs Sterling could rally. Conversely, a unanimous interest rate decision could have negative repercussions for the Pound.

Euro

Germany’s less-than-impressive Industrial Production report for August left the Euro under pressure on Wednesday. Although figures for July were positively revised, the month-on-month decline of -1.2% and annual number of 2.3% were decidedly lower than the respective forecasts of 0.2% and 3.3%.

The Euro dipped against both the Pound and US Dollar following the report’s publication. However, the common currency staged a rebound on Thursday despite German trade data revealing the largest slump in exports since the 2009 recession. Support for the Euro came as the new Syriza-led Greek government won a vote of no-confidence, indicating that the nation could at last be on a stable path to recovery.

Given the recent Volkswagen scandal, Germany’s economic prospects are only expected to deteriorate – a circumstance which might encourage the European Central Bank (ECB) to expand stimulus measures. Today’s ECB meeting minutes have the potential to trigger Euro fluctuations.

US Dollar

Fed official John Williams might have been fairly bullish on the likelihood of US borrowing costs being increased this year, but US Dollar trading remained cautious following last Friday’s disastrous Non-Farm Payrolls report.

The ‘Greenback’ is holding lower across the board this morning ahead of the publication of the minutes from the last Federal Open Market Committee (FOMC) policy gathering. As the minutes were taken prior to the recent batch of domestic employment numbers being released, their impact may be muted.

That being said, if the Fed adopts a dovish tone and takes the prospect of an October interest rate revision off the table, we could see ‘Cable’ push back towards the 1.54 level – provided the BoE minutes are on the hawkish side.

The US initial jobless and continuing claims numbers will also be of interest.

Canadian Dollar

The ‘Loonie’s rally extended on Wednesday as crude oil prices continued recovering from last week’s 11-year low. With commodities firming and speculation regarding US interest rates swirling, the Canadian Dollar has so far shrugged off disappointing domestic data this week.

Yesterday’s Building Permits report revealed an unexpected -3.7% slump on the month in August, but the data had little impact. Canada is set to publish its Housing Starts number and New Housing Price Index later today, but commodity price movement and central bank policy concerns are likely to have a more significant impact on ‘Loonie’ trading.

Australian Dollar

The Australian Dollar’s impressive winning streak persisted on Wednesday, with the ‘Aussie’ registering additional gains against both the US Dollar and Pound.

However, some industry experts have predicted that this reprieve is temporary, with Chinese growth concerns and the eventual tightening of policy in the US likely to drive the Australian Dollar into another slump before too long.

New Zealand Dollar

A positive dairy auction sent the New Zealand Dollar above the 66 cent mark against the US Dollar mid-week, with the commodity currency largely holding gains ahead of the release of New Zealand’s Card Spending report.

As some analysts have asserted that the ‘Kiwi’ looks ‘exhausted’ after its recent rally, disappointing domestic data could provide the impetus for a downtrend. However, a dovish set of meeting minutes from the FOMC may lend the New Zealand Dollar underlying support.

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GBP Softens in Early Session

After domestic data showed that British Consumer Confidence dropped beyond expectations in September, the Pound softened versus most of its major peers. Sterling depreciation has been minimal in the early stages of Wednesday’s European session, however, thanks to a 0.5% rise in September’s monthly Nationwide House Prices report. As traders await the final figure for second-quarter Gross Domestic Product, the British asset is likely to trend narrowly. Given that there have already been some major upward revisions to GDP between 2011 and 2013, many economists expect further upgrades. This is likely to bolster the confidence of the Chancellor George Osborne and give fodder to retort against accusations fired by the leader of the opposition, but it is unlikely to pressure the Bank of England (BoE) into hiking the benchmark interest rate.

Euro

Thus far on Wednesday, German data printed poorly which is weighing on demand for the common currency. August’s Retail Sales saw just 2.5% growth on the year which missed the median market projection of 3.3% sales growth. On a monthly basis, Germany’s retail sales contracted by -0.4%. Later on Wednesday morning German labour market data is likely to provoke single currency volatility. With the potential for massive layoffs in Germany’s automotive industry, the government will be hoping for an unexpected drop in unemployment to cushion the blow. Eurozone inflation data, also due later on Wednesday morning, will be of interest to those invested in the shared asset.

US Dollar

After US Consumer Confidence unexpectedly rose in September, the US Dollar advanced versus many of its peers. However, mounting uncertainties regarding the timing of the Federal Reserve benchmark rate lift-off is weighing on sentiment. With mixed messages from Fed officials, divergent data results and external pressures from China’s economic woes, the US Dollar could see subdued trade ahead of mortgages data due for publication during Wednesday’s North American session.

Australian Dollar

Glencore stocks gained for a second day in London which allowed metal prices to rally after a long period of depreciation. Base metals were among those commodities hardest hit by China’s ailing economic progress. The Australian Dollar edged higher on the news, but gains have been limited with gold prices struggling and iron ore prices still comparatively weak. Mixed results from domestic data, which saw Private Sector Credit gain by Building Approvals decline, had minimal impact on ‘Aussie’ (AUD) volatility.

New Zealand Dollar

After the Shanghai Composite Index ended the Asian session 0.5% up, the New Zealand Dollar strengthened versus its major peers. Additional gains can be attributed to the recent rise in dairy prices. However, the ‘Kiwi’ (NZD) has made steady gains of late which could undermine the Reserve Bank of New Zealand’s (RBNZ) attempts to devalue the currency. Should this be the case, the central bank may be forced into easing monetary policy again.

Canadian Dollar

Oil prices advanced overnight amid speculation output from the US will slow considerably. However, prices edged lower as Wednesday’s European session opened as crude futures remain vulnerable to China’s economic slowdown and dwindling global demand. The Canadian Dollar is trending narrowly versus most of its major rivals today ahead of July’s Gross Domestic Product report. Should growth meet or exceed the forecast 0.7% increase the ‘Loonie’ (CAD) is likely to rally.

South African Rand

South African economic data printed positively on Wednesday morning which stimulated a Rand uptrend. August’s Money Supply and Private Sector Credit reports bettered estimates. The confusion surrounding Federal Reserve rate hike bets is also aiding demand for the Rand.

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Pound Trending Lower Again As BoE Comments Cause Concern

The Pound was left trending lower against the majority of its currency counterparts on Thursday as yet more conflicting commentary from the Bank of England (BoE) weighed on UK interest rate hike expectations. This time it was MPC member Ben Broadbent speaking out, with the official asserting that even without the situation in China he wouldn’t be considering voting for higher borrowing costs at this juncture. The UK’s BBA Loans for House Purchase figure also came in slightly lower than estimated, although it still represented a five-year high. With UK data in short supply today Sterling movement may be limited before the weekend.

Euro

Bets that the European Central Bank (ECB) will refrain from adjusting quantitative easing for the foreseeable future lent the Euro support in the second half of the week. Demand for the common currency also remained slightly stronger as the German IFO Business Climate and Expectations reports printed more strongly-than-anticipated. Whether the Euro’s uptrend continues largely depends on how next week’s Consumer Price Index (CPI) for the Eurozone comes out. An increase in inflation would be Euro-supportive as it may further defer ECB intervention.

US Dollar

The US Dollar held previous gains against the Pound on Thursday despite US initial jobless and continuing claims figures disappointing expectations. Some ‘Greenback’ support came from the news that US Durable Goods Orders fell by -2.0% in August rather than the -2.3% anticipated. US New Home Sales also rose by more-than-forecast. Later in the local session Fed Chairwoman Janet Yellen pushed USD higher by asserting that it ‘will likely be appropriate to raise the target range for the federal funds rate sometime later this year’. In the hours ahead the US second quarter growth figure and Markit Services/Composite PMI numbers could have an impact on US Dollar trading, as could the University of Michigan Confidence index for September. Positive reports may see ‘Cable’ brush new lows while negative releases could help the Pound gain on the US Dollar before the weekend.

Australian Dollar

With Federal Reserve chief Janet Yellen keeping hopes of a 2015 interest rate adjustment alive, commodity-driven currencies like the Australian Dollar declined. The AUD/USD exchange rate fell back below the key support level of 70 US cents, although it has since recovered from its initial lows. Next week investors with an interest in the Australian Dollar will be focusing on news from China. If the Asian nation’s manufacturing/services PMIs provide cause for concern, the ‘Aussie’ is likely to slide.

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GBP Rate Takes Modest Gains Towards Weekend

With little fresh domestic stimulus to react to, holders of the Pound opted against embarking on large trades yesterday. However, data released in the US, showing that growth rebounded in the second quarter, helped Sterling to appreciate against the risk-sensitive commodity bloc as Fed rate hike bets improved slightly. Before the weekend demand for the UK tender will likely depend on foreign news flows once more.

Euro

The Pound to Euro exchange rate rallied by around 60 cents yesterday as German consumer prices came in weaker-than-expected at 0.2%. Although the inflation index was only slightly below the consensus of 0.3% the miss helped set Sterling on its way to a day of steady gains.

Matters were made worse during the afternoon when the IMF said that Greece’s large debt pile paired with the Hellenic Republic’s chequered history of implementing economic reforms meant that Greece was unsuitable for a third IMF bailout. The concerning statement came as Greek PM Alexis Tsipras threatened to hold an internal referendum within the Syriza party on whether to accept the conditions of the latest bailout deal. And it is exactly uncertainties such as this that are putting the IMF off from signing up to the bill.

The single currency weakened following the IMF and Tsipras announcements as jittery traders hedged against the possibility that the Greek government could renege on the recently agreed bailout package.

US Dollar

The Pound to US Dollar exchange rate remained fairly flat yesterday, with ‘Cable’ managing to attain a stronghold above technical resistance for most of the London session.

Demand for the ‘Greenback’ did spike during the afternoon when the latest US growth report showed that the economy rebounded from a previously reported -0.2% slump to strengthen 2.3% in the second quarter. The first quarter GDP result was actually upgraded to show an expansion of +0.6% in the first three months of the year but this did not lead to a massive surge in Federal Reserve rate hike bets and the Dollar’s performance remained muted versus Sterling.

Some analysts said the upbeat annualised growth print of 2.3% paired with the positive revision to the Q1 figures showed that the US economy was ready for a tightening of monetary policy but the consensus appeared to be that Fed policymakers would wait until December to start its long-anticipated hiking cycle.

Canadian Dollar

Sterling rallied by around 80 pips against the Canadian Dollar yesterday in reaction to the sturdy US GDP report, which led to a softening in demand for the commodity-correlated ‘Loonie’ due to a perceived mildly increased chance of a rise in Fed rates.

Annualised Canadian economic growth is tipped to slow from 1.2% to 0.8% tomorrow but the monthly GDP indicator is expected to rise minimally from -0.1% to 0.0%. Traders are unlikely to pile into the Canadian Dollar following the results and there is every chance that the ‘Loonie’ could decline if the growth report is seen to disappoint market expectations.

Australian Dollar

The recent erosion in the value of the Australian Dollar continued yesterday as investors chipped away at the Antipodean currency and dragged it to a fresh six-year low against Sterling. Technical trading patterns point towards further losses for the ‘Aussie’ whilst the current climate of sliding commodity prices and Chinese uncertainty appear to corroborate calls for the Australian Dollar’s three-month, 40-pip, losing streak to continue.

New Zealand Dollar

The Pound appreciated by almost two cents yesterday as the recent relief rally in favour of the ‘Kiwi’ started to fade. Fundamentals, which include a hawkish Bank of England and an extremely dovish Reserve Bank of New Zealand, suggest that there could be further losses in store for the New Zealand Dollar over the next few months.

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