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Sterling (GBP) Jumps as UK Avoids Recession

Published: 11 Nov at 5 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) Rises as UK Escapes Recession

The Pound (GBP) rose against a handful of currencies on Monday as data revealed the UK had escaped falling into recession during the third quarter of 2019. Sterling rallied despite the data showing the country saw the weakest annual growth since 2010 when the UK clawed its way out of recession.

Meanwhile, GBP received further support after Brexit Party leader Nigel Farage said his party would not contest the 317 seats the Conservatives won in 2017 which caused Pound sentiment to rise as the chances of Prime Minister Boris Johnson winning a majority rose.

Looking ahead, Sterling is likely to slide following the release of the UK employment and wage growth data. If the unemployment rate rises and wage growth shows signs of stalling, it is likely GBP will fall.

Pound Euro (GBP/EUR) Exchange Rate Edges Higher Ahead of German Consumer Sentiment

The Pound Euro (GBP/EUR) exchange rate rose on Monday as Brexit optimism buoyed Sterling and German data weighed on the single currency.

German wholesale prices contracted at an annualised rate of -2.3% which was the fourth consecutive month of yearly decreases which left the single currency under pressure.

Meanwhile, the Euro is likely to edge up following the release of the German ZEW economic sentiment index. If sentiment rises higher than expected in the bloc’s largest economy, it is likely to cause the pairing to fall.

Pound US Dollar (GBP/USD) Exchange Rate Rallies as Investors Look for an End to US-China Tensions

The US Dollar (USD) slumped against the Pound (GBP) on Monday as traders looked for an end to the ongoing US-China trade tensions.

At the end of last week, the US President downplayed reports, and dismissed claims that the US and China had agreed to rollback tariffs as part of a ‘Phase One’ US-China trade deal.

Despite comments from US President Donald Trump that discussions with China were progressing ‘very nicely’, he also added that the US would only make a deal that was the right one for the country.

Looking ahead to Tuesday, the ‘Greenback’ could be left under pressure ahead of several speeches from Federal Reserve policymakers. If Richard Clarida or any other Fed policymaker mentions monetary policy, and their tone is overly dovish, USD is likely to slide.

Declining Oil Prices Causes Pound Canadian Dollar (GBP/CAD) Exchange Rate to Rise

The Canadian Dollar (CAD) fell against the Pound (GBP) as US-China trade tensions weighed on oil prices, causing them to decline after President Trump’s comments at the end of last week.

Meanwhile, the ‘Loonie’ is likely to continue to react to further movement of oil prices. If US-China trade tensions continue to weigh on oil prices, it is likely the oil-sensitive Canadian Dollar will fall.

Pound Australian Dollar (GBP/AUD) Exchange Rate Jumps 1%

The Pound Australian Dollar (GBP/AUD) exchange rate rallied by around 1% on Monday as Brexit optimism and lower risk appetite buoyed the pairing.

Increased US-China tensions weighed on the ‘Aussie’ as risk appetite fell as data showed the trade war caused Chinese producer prices to slide by the most in over three years.

Looking ahead, AUD is likely to rebound against Sterling following the release of Westpac’s consumer confidence data. If confidence rises in November, it is likely to buoy the ‘Aussie’.

Pound New Zealand Dollar (GBP/NZD) Exchange Rate Muted Ahead of RBNZ Rate Decision

The Pound New Zealand Dollar (GBP/NZD) exchange rate was left largely flat on Monday thanks to optimism the UK Conservatives have a higher chance of securing a majority during the 12th December election and higher trade optimism despite President Trump’s comments.

The ‘Kiwi’ was left under pressure ahead of Wednesday’s Reserve Bank of New Zealand (RBNZ) interest rate decision as markets remained divided about whether the bank will cut rates.

If the RBNZ slashes rate from 1% to 0.75% and policymakers are overly dovish in the press conference following the decision it is likely the New Zealand Dollar will slide against Sterling later in the week.

As of Monday, 11th November 2019, the Pound Sterling currency rates mentioned within this news item were as follows:

GBP EUR exchange rate was 1.165, GBP USD exchange rate was 1.2855, GBP AUD exchange rate was 1.8764, GBP NZD exchange rate was 2.0195, GBP CAD exchange rate was 1.7012, and GBP CNY exchange rate was 9.0119.
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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