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Limp Sterling (GBP) Sees Mixed Wednesday Movement Against Majors

Published: 2 Aug at 5 PM Tags: Euro, Dollar, Pound Sterling, America, UK, Eurozone, Australian Dollar, New Zealand Dollar, Canadian Dollar, Australia, New Zealand, USA, Canada,

Pound Sterling (GBP)
The Pound saw limp trade for most of today’s trade session. Optimism about this week’s manufacturing PMI has largely been priced into Sterling already and the day’s construction PMI fell short of expectations.

Markit’s UK construction PMI for July was only expected to slip slightly from 54.8 to 54.5, but instead slumped to a disappointing 51.9. While UK construction isn’t particularly influential, investors still had no reason to buy the Pound on Wednesday.

Sterling is likely to see major movement on Thursday in reaction to the day’s Bank of England (BoE) news and July services PMI.

Euro (EUR)
The Pound to Euro exchange rate has seen largely flat trade this week as Sterling has been unable to recover against a firm Euro.

As with the Pound, the Euro saw little change in direction on Wednesday due to a lack of fresh notable data. Investors largely overlooked Spain’s unemployment change report from July, which came in short of expectations.

After this week’s otherwise solid Eurozone unemployment and Gross Domestic Product (GDP) reports, investors remain confident in the Euro outlook and the Eurozone’s economy.

US Dollar (USD)
The Pound to US Dollar exchange rate has easily advanced so far this week due to broad weakness in the US Dollar. Towards the end of Wednesday’s European session, GBP/USD trended near its best levels since September 2016.

None of the day’s US data led to any boosts in Federal Reserve rate hike bets or US Dollar demand. ADP’s July employment change report fell short of expectations, coming in at 178k rather than the forecast 185k.

The US Dollar could be influenced by ISM’s July composite PMI on Thursday, but ‘Greenback’ traders are more likely to wait for Friday’s highly anticipated US Non-Farm Payroll report before they make any big moves on the currency this week.

Australian Dollar (AUD)
The Pound to Australian Dollar exchange rate hit its best levels in two weeks on Wednesday as Sterling benefitted from Australian Dollar weakness.

However, towards the end of the day GBP/AUD fell back from these highs. Demand for the Australian Dollar improved slightly as investors were impressed by June’s Australian building permits report, which jumped to 10.9%. Demand for risky currencies in general also rose on broad USD weakness.

AUD traders are highly anticipating Thursday’s Australian trade balance report.

However, as the Reserve Bank of Australia (RBA) has warned on the Australian Dollar’s value this week, GBP/AUD is unlikely to fall too far in the coming days as investors hesitate to buy the ‘Aussie’.

New Zealand Dollar (NZD)
As with GBP/AUD, the Pound to New Zealand Dollar exchange rate slipped from its highs on Wednesday afternoon as demand for risk-correlated currencies improved slightly.

GBP/NZD is unlikely to fall far unless Thursday’s UK news disappoints traders. Commodity news has been poor this week and New Zealand’s latest unemployment report was disappointing, giving investors little reason to buy up the ‘Kiwi’ either.

Canadian Dollar (CAD)
The Pound to Canadian Dollar slipped from its best levels in three weeks on Wednesday afternoon, as Sterling lacked the drive to continue advancing against the ‘Loonie’ and demand for risk-correlated currencies was boosted by US Dollar weakness.

GBP/CAD could resume its advances on Thursday if UK data impresses, but the Canadian Dollar could see stronger demand at the end of the week if July’s employment report beats expectations.
As of Wednesday, 2nd August 2017, the Pound Sterling currency rates mentioned within this news item were as follows:

GBP EUR exchange rate was 1.116, GBP USD exchange rate was 1.3226, GBP AUD exchange rate was 1.6606, GBP NZD exchange rate was 1.7824, and GBP CAD exchange rate was 1.6624.
Dominic Lee About Author: (474 Posts)With over ten years experience as an economist – including four years spent as a chief economist with a major currency broker – Dominic has acquired a wealth of knowledge which he uses to forecast market movements. Dominic now works as an independent business advisor and writes for several financial publications.

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