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Pound Sterling Surges Higher on US-UK Trade Deal Hopes, US Dollar Still Volatile as Election Fallout Continues

Published: 10 Nov at 5 PM Tags: Euro, Dollar, Pound Sterling, America, UK, Eurozone, Australian Dollar, New Zealand Dollar, Canadian Dollar, Australia, New Zealand, USA, Canada, Greece,

Pound Sterling
The UK housing market continued to demonstrate signs of resilience, with the RICS House Price Balance for October unexpectedly strengthening from 18% to 23%. This offered encouragement to the Pound, despite the weaker nature of recent production and trade data. Demand for Sterling was given a further boost by commentary from Donald Trump’s campaign team, who reaffirmed that the UK would be at the front of the queue when it comes to negotiating a new trade deal.

Despite earlier comments from European Central Bank (ECB) policymakers, the single currency returned to a stronger footing. While the ECB still looks likely to announce an extension to its quantitative easing program in December, the Euro has continued to benefit from the volatile nature of market sentiment. Although the Greek unemployment rate was found to have unexpectedly edged higher in August, this failed to particularly dent the mood towards the Euro.

US Dollar
For the most part the ‘Greenback’ has continued to advance strongly today, with markets continuing to react with cautious optimism to the presidential election result. However, despite the more conciliatory tone taken in Donald Trump’s acceptance speech a high level of uncertainty hangs over the US economy. With investors still awaiting greater clarity on which politics Trump will push forward with the appeal of the US Dollar is likely to turn more muted ahead of the weekend.

Australian Dollar
Even though markets remained in a relatively volatile state on Thursday the ‘Aussie’ was able to make some solid gains across the board. Even though November’s consumer inflation expectation survey proved disappointing the Australian Dollar was supported by the strong rally of base metal prices. The commodity-correlated currency particularly benefitted from the strength of copper, which rose to its highest level since July 2015.

New Zealand Dollar
It came as little surprise to markets when the Reserve Bank of New Zealand (RBNZ) opted to cut interest rates to a fresh low overnight. However, despite policymakers indicating that rates are unlikely to see any further move for the foreseeable future, the ‘Kiwi’ slumped sharply in response to the announcement. With a sense of uncertainty continuing to dominate the outlook of global markets the higher-yielding New Zealand Dollar struggled to boost its appeal, particularly as confidence in the US Dollar strengthened.

Canadian Dollar
A larger-than-expected gain in US crude oil inventories did little to support the faltering oil price. Although market risk appetite was generally improved, continuing to recover well from the shock of the US elections, there are persistent worries over the global oil supply glut. Given some of the rhetoric from Trump’s campaign, investors are nervous of the prospect of the US increasing its output, a prospect that is weighing on the Canadian Dollar.
As of Thursday, 10th November 2016, the Pound Sterling currency rates mentioned within this news item were as follows:

GBP EUR exchange rate was 1.1529, GBP USD exchange rate was 1.2553, GBP AUD exchange rate was 1.6493, GBP NZD exchange rate was 1.7409, and GBP CAD exchange rate was 1.6911.
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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