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US Dollar (USD) Softens ahead of Yellen Comments, Pound Sterling (GBP) Makes Fresh Gains despite Disappointing Data

Published: 10 Feb at 11 AM Tags: Euro, Dollar, Pound Sterling, America, UK, Eurozone, Australian Dollar, New Zealand Dollar, Canadian Dollar, Australia, New Zealand, USA, Canada, Greece,

Weaker UK Production Data Fails to Dent GBP

Despite December’s UK Industrial and Manufacturing Production figures proving worse than anticipated, with output contracting on the month and the year, the Pound has remained on a largely stronger footing against rivals today. While the odds of the Bank of England (BoE) opting to raise rates in the near future traders are increasingly dismissing the likelihood that the next move on interest rates could be downwards.

EUR Trends Lower on Speculation of ECB Loosening

The single currency has slumped on Wednesday morning, in spite of shares in Deutsche Bank and the European banking sector in general starting to recover from the bearishness of the early week. Recent forecasts have suggested that the European Central Bank (ECB) could soon cut interest rates further into negative territory, a prospect that has severely dented the appeal of the Euro. Concern over the continued success of the Greek bailout is equally putting a dampener on sentiment.

Upcoming Yellen Speech Weighs on USD

Some of its recent bullishness has left the US Dollar as investors position themselves ahead of this afternoon’s comments from Fed Chair Janet Yellen. Traders are expecting the policymaker to take a somewhat more dovish stance on the central bank’s monetary policy outlook, with the ‘Greenback’ likely to weaken further if Yellen confirms that the Fed is no longer on track to hike interest rates four more times over the course of 2016.

CAD Volatile as Oil Surplus set to Continue

With the price of Brent crude slipping back towards $30 per barrel sentiment towards the Canadian Dollar is struggling to maintain any particular optimism, particularly after the International Energy Agency indicated that the global supply glut was likely to persist for longer. Although risk aversion has declined somewhat after Tuesday’s rout the ‘Loonie’ is trending more cautiously, lacking supportive domestic data.

Improved Westpac Consumer Confidence Boosts AUD

Demand for the Australian Dollar has risen on Wednesday, however, after the December HIA New Home Sales showed a strong increase alongside a jump in the Westpac Consumer Confidence Index. As this suggests that the domestic housing market remains relatively robust the antipodean currency has been pushed higher against rivals. The ‘Aussie’ is equally climbing on hopes that the Fed will hold off on further monetary tightening for the near future.

NZD Climbs Higher as Risk Appetite Rises

Increased New Zealand Card Spending has helped to shore up the New Zealand Dollar somewhat today, with improved investor confidence also boosting the appeal of the ‘Kiwi’. The prospect of a more dovish Fed is also welcome, as a slower pace of US interest rate hikes would reduce the onus on the Reserve Bank of New Zealand (RBNZ) to imminently begin cutting rates.
As of Wednesday, 10th February 2016, the Pound Sterling currency rates mentioned within this news item were as follows:

GBP EUR exchange rate was 1.2873, GBP USD exchange rate was 1.4523, GBP AUD exchange rate was 2.045, GBP NZD exchange rate was 2.1729, and GBP CAD exchange rate was 2.0222.
Patrick James About Author: (289 Posts)Patrick completed his economics degree just as the global financial crisis struck in 2008. In the intervening years Patrick has made his mark, climbing to a prominent position within a large financial services provider. As part of his role Patrick uses his expertise to advise companies of the best ways to safeguard against currency risk.

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