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Pound Exchange Rates Drop on Growing ?No-Deal? Brexit Fears

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

Pound Sterling (GBP)

Pound Sterling has been in low demand today, falling by -0.3% against the Euro and trading tightly against the US Dollar.

There has been little high-impact UK data out this week, so the Pound has instead been affected by growing concerns about the Brexit process.

Suggestions that a no-deal Brexit is not only undesirable but likely have rattled GBP traders recently, causing steady losses against most currency peers.

The current week could end on a positive note for GBP traders, if Friday’s GDP growth rate readings show as-expected growth during Q2 2018.

An accelerating pace of price growth might be enough to raise GBP trader confidence and push the Pound up in demand.

Euro (EUR)

The Euro has risen by 0.3% against the Pound and US Dollar today; this appreciation is mainly down to a devalued US Dollar boosting EUR exchange rates.

The most recent Eurozone economic data hasn’t been entirely supportive – German industrial output has fallen while the national trade surplus hasn’t risen by as much as forecast.

The Euro could advance on Thursday when the European Central Bank (ECB) releases an economic bulletin – this might be optimistic enough to push EUR exchange rates higher.

US Dollar (USD)

A notable deterioration of the US-Iran relationship has triggered widespread US Dollar losses today, as USD traders react to the latest development.

US President Donald Trump has announced that sanctions have been imposed against Iran and has further rattled USD traders by declaring that anyone doing business with Iran won’t be able to trade with the US.

Although EU nations are expected to be protected from having to cut off activities with Iran, other nations don’t have such protections so there could be major disruption in the months ahead.

The US Dollar could recover and advance against its currency peers this evening, if a US crude oil stock measurement shows a forecast-matching decline.

Lower stockpiles of crude oil might mean higher oil prices in the US, which are beneficial to exporters.

Australian Dollar (AUD)

With the US Dollar sliding in value today, risk sentiment has risen and boosted demand for currencies like the Australian Dollar.

AUD exchange rate gains have been seen across the board, both on the US Dollar decline and because of a somewhat positive Reserve Bank of Australia (RBA) meeting.

RBA policymakers left interest rates at 1.5%, but there were suggestions that rates could be raised in 2019 or 2020.

The Australian Dollar might rise further on Wednesday morning, if RBA Governor Philip Lowe reveals an optimistic economic outlook.

New Zealand Dollar (NZD)

Although the New Zealand Dollar has been supported today by the US Dollar decline, the NZD hasn’t made such universal gains against its currency peers.

The latest movements have included an advance against the Pound and US Dollar but a decline against the Australian Dollar and Chinese Yuan.

Recent Global Dairy Trade price index data has shown a -1.7% drop in dairy prices, which has effectively kept the New Zealand Dollar in check today.

Looking ahead, the New Zealand Dollar might make overall gains on Wednesday evening when interest rate data is released.

This isn’t expected to bring any change to interest rates, but could still boost the NZD with a positive outlook from RBNZ policymakers.

Canadian Dollar (CAD)

The Canadian Dollar has given a disappointing overall performance today, falling against the Australian Dollar and Euro while trading tightly against the Pound and US Dollar.

This mixed movement comes after Saudi Arabia expelled Canada’s ambassador, banned flights to Canada and froze all future business between the two countries.

This diplomatic incident has been caused by Canadian officials criticising the arrest of women’s rights activists in Saudi Arabia.

The news has economic significance because Saudi oil is exported to Canada and trade between the two nations equals around $3bn each year.

Barring any immediate changes in Canadian-Saudi relations, the Canadian Dollar could next be affected by Thursday’s building permits reading for June.

This is expected to shift from 4.7% growth to a much slower 1% during the month, which could unsettle CAD traders and cause exchange rate losses.
As of Tuesday, 7th August 2018, the Pound Sterling currency rates mentioned within this news item were as follows:

GBP EUR exchange rate was 1.1159, GBP USD exchange rate was 1.2943, GBP AUD exchange rate was 1.7449, GBP NZD exchange rate was 1.9215, GBP CAD exchange rate was 1.6906, and GBP CNY exchange rate was 8.8412.
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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