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Pound (GBP) Awaits BoE Meeting; Euro (EUR) Softens; Sanctions May Affect ‘Buck’(USD)

Published: 7 Aug at 1 PM Tags: Euro, Dollar, Pound Sterling, America, UK, Eurozone, Australian Dollar, New Zealand Dollar, Canadian Dollar, Australia, New Zealand, USA, Canada, Germany, Italy, Russia, South Africa,

Pound (GBP)

Thursday will see the Bank of England (BoE) Asset Purchase Target and Interest Rate Decision announced, which the currency market eagerly anticipates to assess the strength of Sterling. Much speculation presently surrounds the UK economy and its feasibility to withstand interest rate hikes. The Pound (GBP) has flopped in recent weeks as poor domestic data (like Wednesday’s Manufacturing and Industrial Production figures) added to the downward pressure on Sterling. The Gross Domestic Product Estimate for the three months to July reached only 0.6% —0.2% down from the revised estimate for the previous three months. The Pound is currently trading at 1.6836 versus its counterpart the US Dollar (USD).

Euro (EUR)

The Euro (EUR) experienced a disappointing day on Wednesday as Italian Gross Domestic Product figures revealed that the Eurozone’s third largest economy is in recession. Furthermore, Thursday has seen German Industrial Production figures flop, failing to reach the 0.3% as forecast, instead residing at -0.5%. As geopolitical tensions rise with regards to Russia and Ukraine, the Euro is likely to face volatility against other majors. Moreover, the European Central Bank (ECB) Interest Rate Decision (which will be announced on Thursday) will be watched carefully following the ECB’s recent unorthodox stimulus measures. The current speculation suggests that the ECB will maintain interest rates at their present level. Economist Reinhard Cluse stated: ‘After the fireworks in June, it is not the time to take fresh measures because the ECB wants to wait and see how things develop.’ The Euro is presently trading at 1.3377.

US Dollar (USD)

The US Dollar (USD) is presently trading against the Pound (GBP) at 0.5940; and reaching 0.7474 versus the Euro (EUR), as faith in the US economic recovery remains strong and investors turn to the safe- haven currency amid geopolitical tensions. However, speculation is circulating that sanctions enforced against Russia by the US and EU could rebound against the US Dollar. Bloomberg representative Rachel Evans commented that the sanctions: ‘hasten a move away from the Dollar that’s been stirring since the global financial crisis [in 2008].’ The US Dollar could fluctuate off the back of Initial Jobless Claims and Continuing Claims figures published today.

Canadian Dollar (CAD)

The Canadian Dollar (CAD) is currently trading against the US Dollar (USD) at 0.9153 with further falling for the ‘Loonie’ in the currency market expected by economists. The Canadian Dollar as a commodity currency faces more volatility in times of global conflict, such as the current geopolitical tensions involving Russia and Ukraine. As crude oil prices have dropped amid fears regarding Russia’s decision to place troops on the Ukrainian border, the ‘Loonie’ fell to its lowest point in recent months. Thursday will see the release of the Canadian Purchasing Managers Index which is predicted to reach 51.0 in July, showing productivity as the figure reaches over the 50 benchmark.

Australian Dollar (AUD)

The Australian Performance of Construction Index, Employment Change, and Unemployment Rate figures were published in the early hours of Thursday morning, with numbers showing a steeper decline than expected. Australia’s employment market was forecast to employ 13.2K jobseekers; however the actual figure proved to be an unfavourable, -0.3K. Furthermore, Unemployment Rate statistics showed the data did not stagnate at 6.0% in July as expected; instead the amount of job seekers rose to 6.4%. The Australian Dollar (AUD) has dropped significantly and is presently performing against the US Dollar (USD) at 0.9267.

New Zealand Dollar (NZD)

The New Zealand Dollar (NZD) is trading at 0.8457 versus the US Dollar (USD) on Thursday, and at 0.9124 against its Australian counterpart the ‘Aussie’ (AUD). New Zealand published House Price figures today that signal the end of the nation’s data releases this week; the index showed house prices growing at a more lethargic rate in July than economists expected. The index revealed a 7.6% acceleration in house prices year-on-year; a slower gain than June’s 8%.

South African Rand (ZAR)

The South African Rand (ZAR) is residing in the region of 0.0929 against the US Dollar (USD) on Thursday following an extended period of volatility from political disagreements in South Africa. Friday will see a meeting by the companies under the umbrella of the National Employers Association of South Africa (NEASA) to discuss the wage issues that are causing the recent work stoppage to continue. NEASA have locked out up to 80,000 members of the original 300,000 involved in strike action—despite the signing of new contracts last week—in refusal to conform to the latest agreement of a 10% raise. NEASA are arguing that a 10% raise is unfeasible commenting: ‘It’s the repeated agreements of this nature that’s causing this decline in the industry, causing the bloodshed in terms of job losses.’ The USD to ZAR exchange rate is presently reaching 10.7567.
As of Thursday, 7th August 2014, the Pound Sterling currency rates mentioned within this news item were as follows:

GBP EUR exchange rate was 1.2599, GBP USD exchange rate was 1.6832, GBP AUD exchange rate was 1.816, GBP NZD exchange rate was 1.9899, GBP CAD exchange rate was 1.84, GBP RUB exchange rate was 61.0899, and GBP ZAR exchange rate was 18.106.
Laura Parsons About Author: (357 Posts)Laura works in the financial sector as a currency analyst, studying the latest global economic developments and assessing their impact on the foreign exchange market. Laura uses her currency knowledge to write articles focussing on market movements and trends for several independent financial websites.

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