Published: 12 Jul at 2 PM Tags: Euro, Dollar, Pound Sterling, America, UK, Eurozone, Australian Dollar, New Zealand Dollar, Canadian Dollar, Australia, New Zealand, USA, Canada, Italy, Japan,
Pound Sterling (GBP)
The Pound surged upwards on Tuesday, extending on its Monday rally following news that Britainâ€™s next Prime Minister would be in office far quicker than expected.
The UKâ€™s Conservative leadership contest had been whittled down to two finalists, Andrea Leadsom and Theresa May, last Thursday. These two were expected to campaign head to head until September, when the winner would be elected via a vote among all Conservative party members.
However, the contest came to an abrupt halt on Monday after Leadsom pulled out, making May the winner by default. Outgoing PM Cameron confirmed that May would be Prime Minister by Wednesday evening, ending one factor in a long period of political uncertainty and boosting sentiment towards the UK and the Pound.
Sterling could easily drop again as Thursday approaches, with the Bank of England (BoE) expected to introduce stimulus and easing measures as well as potentially cut the key UK interest rate.
US Dollar (USD)
The Pound to US Dollar continued its advance by around a cent on Tuesday as Sterling investors capitalised on both the appointment of PM Theresa May, as well as a plummet in sentiment towards â€˜safe-havenâ€™ currencies like the US Dollar.
Last Fridayâ€™s highly optimistic Non-Farm Payroll report indicated that the job market was thoroughly healthy in June, giving the US Dollar some solid ground amid recent economic uncertainty. While this data was largely collected before Britainâ€™s shocking Brexit result in late-June, it indicated that the US economy may be strong enough to weather the worst of any Brexit shockwaves.
However, a plummeting Japanese Yen drove markets away from â€˜safe-havenâ€™ assets and towards riskier currencies, leaving the US Dollar weaker on Tuesday.
The Euro slipped against most majors on Tuesday as a boost in appeal towards the Pound and risk-correlated currencies left the uninspired shared currency in the dust.
Despite news that the Eurogroup did not consider the ongoing Italian banks issue to be an â€˜acute crisisâ€™, the Euro remained weak with a lack of overly positive news to boost it up as markets flooded towards more exciting investments.
Eurozone financial ministers have also warned once again that prolonged uncertainty and shock surrounding Britainâ€™s Brexit vote could harm Eurozone growth going forward if uncertainty lasts for an extended period of time.
Australian Dollar (AUD)
The Australian Dollar held its ground against a bullish Pound during Tuesdayâ€™s session, as markets looked favourably upon Australia
â€™s economic situation.
Following the weekendâ€™s news that Malcolm Turnbullâ€™s Coalition party would likely win the election and put an end to potential political uncertainty, a report of Australian business confidence released on Tuesday boosted â€˜Aussieâ€™ appeal.
Following a disappointing score of 3 in May, Australian business confidence improved to 6 in June despite the onslaught of Brexit uncertainty in the global market throughout the month. This indicated to analysts that the Australian economy could remain healthy and weather Brexit shockwaves hitting other nations. An increase in appeal for risky currencies also bolstered the â€˜Aussieâ€™ on Tuesday.
The New Zealand Dollar was relatively sturdy during Tuesdayâ€™s European session, but still dropped against the Pound as Sterling continued its Monday rally.
The â€˜Kiwiâ€™ had previously plummeted on Monday as investors sold the currency from its recent high levels, after a bullish NZD run last week. After its Monday plummet however, markets were eager to return to the â€˜Kiwiâ€™, especially following the weak Yen-influenced risk-on movement in the forex market.
Canadian Dollar (CAD)
The Pound to Canadian Dollar exchange rate has been bullish since markets opened this week, as poor oil prices weighed heavily on the oil-sensitive â€˜Loonieâ€™ Dollar.
Due to high uncertainty and lack of demand since the Brexit vote, as well as weakness in Asian trade, prices of Canada
â€™s most lucrative commodity fell to a two and a half month low on Monday. Since then, the commodity has largely failed to enjoy a solid price rally.
With the Canadian Dollar weakened by the low prices of oil, the Pound was easily able to capitalise, allowing GBP/CAD to regain most of the losses it suffered last week.
As of Tuesday, 12th July 2016, the Pound Sterling currency rates mentioned within this news item were as follows:
GBP EUR exchange rate was 1.198, GBP USD exchange rate was 1.3254, GBP AUD exchange rate was 1.7396, GBP NZD exchange rate was 1.8175, GBP CAD exchange rate was 1.7289, and GBP JPY exchange rate was 138.782.