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Thu 20 Jun 2024 03:21GMT

UK Services Data Triggers Pound Declines, Australian Dollar Broadly Stronger

Published: 6 Jan at 2 PM Tags: Euro, Dollar, Pound Sterling, America, UK, Eurozone, Australian Dollar, New Zealand Dollar, Canadian Dollar, Australia, New Zealand, USA, Canada, China, France, Germany, Greece,

Pound Sterling
After the UK Services PMI printed below forecast levels, the Pound declined against all of its major currency peers. The disappointing ecostat upped the odds of the Bank of England (BoE) delaying an interest rate hike until 2016 and severely undermined demand for the Pound. Given that the BoE is unlikely to take any action at this month’s policy meeting, Sterling could continue to trend lower.

US Dollar
Ahead of the publication of US services and factory orders figures the US Dollar edged slightly lower against some of its rivals as investors turned to gold in a risk-off environment. The ‘Greenback’ did advance to an over 17-month high against the Pound but that was more to do with Sterling weakness than US Dollar strength. If today’s US data supports Fed rate hike bets the US Dollar could advance.

The Euro clawed back recent declines against the Pound as French consumer confidence data impressed. The common currency also derived some support from modest upward revisions to Germany’s services/composite PMI. However, with ECB speculation rife and Greek political concerns rising the Euro is likely to remain on a downtrend against rivals like the US Dollar.

Australian Dollar
The news that Australia’s trade deficit widened by less-than-expected in November, coupled with a surprisingly strong services PMI for China and an increase in gold prices, saw the Australian Dollar advance on several of its main currency counterparts over the course of the Australasian session.

New Zealand Dollar
Although economic reports for New Zealand are in short supply this week, the South Pacific currency benefited from upbeat Chinese ecostats and registered a gain against the US Dollar. The NZD/GBP exchange rate surged by over a 1% as the Pound broadly softened off the back of concerning services data for the UK.

Canadian Dollar
The news that the price of crude oil fell below 50 Dollars a barrel pushed the CAD/USD exchange rate to a 5 ½ year low. However, the Canadian Dollar was holding its own against the Pound ahead of the publication of Canada’s Industrial Product Price and Raw Materials Price Index.
As of Tuesday, 6th January 2015, the Pound Sterling currency rates mentioned within this news item were as follows:

GBP EUR exchange rate was 1.2747, GBP USD exchange rate was 1.5136, GBP AUD exchange rate was 1.8736, GBP NZD exchange rate was 1.9543, GBP CAD exchange rate was 1.7919, and GBP CNY exchange rate was 9.4042.
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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