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Sun 14 Aug 2022 00:35GMT

Investors Hesitant to Make Big Moves as Markets Digest Day of US Political Chaos

Published: 7 Jan at 4 PM Tags: Euro, Dollar, Pound Sterling, America, UK, Eurozone, Australian Dollar, New Zealand Dollar, Canadian Dollar, Australia, New Zealand, USA, Canada, Germany,

Pound Sterling (GBP)

Sterling attempted recovery against many major currencies today. As markets digested Britain’s coronavirus situation, investors were willing to buy the British currency back from its cheapest levels despite disappointing UK PMIs.

Amid a lack of notable UK data due in the coming sessions, Pound movement is likely to be driven more by domestic coronavirus developments in the coming sessions.

Euro (EUR)

The Euro continues to be largely driven by movement in rival currencies like the Pound and US Dollar. Today’s Eurozone inflation and retail stats fell well short of expectations and made it easier for the Euro’s rivals to gain some ground.

German trade balance and unemployment rate figures will be published tomorrow. They are unlikely to influence the Euro’s direction much though, as it will continue to be influenced by movement in rivals.

US Dollar (USD)

The safe haven US Dollar has seen mixed movement this week. The currency has advanced on coronavirus and US political uncertainties, but lingering optimism that things will calm down are limiting safe haven demand.

More key US data will be published towards the end of the week. If tomorrow’s US Non-Farm Payroll report surprises investors it could cause a shift in US Dollar movement.

Australian Dollar (AUD)

The Australian Dollar slipped back from its highs over the past day. Concerns over political instability in the US did weigh on the ‘Aussie’ slightly, and Australia’s latest trade balance data fell short of expectations.

No more notable Australian data is due for publication until Monday’s retail sales report is published. The Australian Dollar will remain more focused on market sentiment.

New Zealand Dollar (NZD)

Similarly to the Australian Dollar, a slight dip in market sentiment left the New Zealand Dollar weaker today. The volatile ‘Kiwi’ was driven largely by market sentiment.

As New Zealand’s coronavirus outlook is optimistic, the currency remains appealing overall. This means it could strengthen again if risk-sentiment rises again.

Canadian Dollar (CAD)

The Pound rebounded against the Canadian Dollar today as well. Oil prices have calmed from recent rises and market sentiment is more mixed, which made investors more hesitant to keep ahold of the Canadian Dollar.

Tomorrow will see the publication of Canada’s December job market report. If this beats expectations it could boost Canadian Dollar demand.
As of Thursday, 7th January 2021, the Pound Sterling currency rates mentioned within this news item were as follows:

GBP EUR exchange rate was 1.1059, GBP USD exchange rate was 1.3569, GBP AUD exchange rate was 1.7465, GBP NZD exchange rate was 1.8678, and GBP CAD exchange rate was 1.7211.
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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