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Thu 30 Mar 2017 03:33 GMT

Euro Recovers as Markets Soft on USD, CAD Before Trump Speech

Published: 27 Feb at 5 PM Tags: Euro, Dollar, Pound Sterling, America, UK, Eurozone, Australian Dollar, New Zealand Dollar, Canadian Dollar, Australia, New Zealand, USA, Canada, France,

Pound Sterling (GBP)

Pound Sterling has tumbled on new fears over the looming start of the UK’s Brexit. Rumour has it that the government expects Scotland to demand another referendum on its independence from the United Kingdom. Considering voters in Scotland chose by a solid majority to remain a part of the EU, investors fear that another vote would this time see the nation choosing a divorce from the UK.

Additionally, Theresa May is supposedly about to declare a cut-off date after which point EU citizens moving to the UK will no longer be eligible for permanent residency. Government sources talking to the press expect this date to be around the 15th of March, but with the UK still a full member of the EU for at least another two years, such a move could spark fury amongst the same EU officials Theresa May is about to start negotiations with.

Euro (EUR)

The Euro is posting a strong recovery today, making bullish gains thanks to new polls that indicate independent Presidential candidate Emmanuel Macron will defeat far-right leader Marine Le Pen in the elections later this year. Le Pen intends to remove France from the Eurozone if she wins, so the fact her popularity has risen notably in recent weeks had alarmed investors. Traders are flocking back to the Euro today, however, now that polls have given Macron a significant lead over Le Pen; just a few weeks ago experts had expected he would be knocked out in the first round of voting.

US Dollar (USD)

Donald Trump is expected to make a speech to Congress on Wednesday and the prospect he will give details of his fiscal stimulus plans is keeping the US Dollar weak today. Markets have been waiting a long time for more clarity on Trump’s plans to boost the economy, so traders are reluctant to adjust their positions when the US Dollar could be about to rocket or plummet depending upon the content of the President’s speech. Even strong durable goods orders figures for January showing 1.6% growth in orders has failed to lift USD.

Australian Dollar (AUD)

The Australian Dollar is largely performing well after the latest economic data has improved the outlook for the domestic economy. During the final three months of 2016 company profits soared 20.1% on the previous quarter. Forecasts had been for growth of 8%, with the actual figure representing the strongest leap in sixteen years. Economists believe this will improve 2017 Q1’s growth, although a smaller-than-expected increase in inventories during 2016 Q4 may soften the positive impact of strengthening profits.

New Zealand Dollar (NZD)

Migration continues to perform strongly, with the number of net arrivals striking a fresh monthly high in January at 6,400, while the year-on-year figures were the best ever recorded at 71,300. Strong migration helps fuel New Zealand’s economic growth, providing an ample supply of skilled workers and increasing domestic demand, so news that the country is a more popular destination than ever has increased demand for the New Zealand Dollar.

Canadian Dollar (CAD)

The potential for Donald Trump to reference trade during his speech on Wednesday has kept the Canadian Dollar on the decline today. The oil markets are posting strong gains thanks to US Dollar weakness, yet this has not translated to higher demand for CAD. A lack of domestic data has not helped either.

As of Monday, 27th February 2017, the Pound Sterling currency rates mentioned within this news item were as follows:

GBP EUR exchange rate was 1.1751, GBP USD exchange rate was 1.2438, GBP AUD exchange rate was 1.6204, GBP NZD exchange rate was 1.7312, and GBP CAD exchange rate was 1.6402.
Patrick James About Author: (259 Posts)Patrick completed his economics degree just as the global financial crisis struck in 2008. In the intervening years Patrick has made his mark, climbing to a prominent position within a large financial services provider. As part of his role Patrick uses his expertise to advise companies of the best ways to safeguard against currency risk.

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