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Euro (EUR) Rises as ECB Slashes Deposit Rate to Fresh Low

Published: 12 Sep at 5 PM Tags: Euro, Dollar, Pound Sterling, America, UK, Eurozone, Australian Dollar, New Zealand Dollar, Canadian Dollar, Australia, New Zealand, USA, Canada, China,

Pound Sterling (GBP) Falls as Draghi Warns Risk of a No-Deal has Increased

Sterling remained under pressure against a handful of currencies on Thursday as the risk of a no-deal Brexit remained on traders’ minds.

Following the European Central Bank (ECB) decision, President Mario Draghi stated the risk of the UK leaving the bloc without a deal had increased.

Sterling edged lower as he noted that in ‘the case of a hard Brexit […] the probability of which has gone up over recent time.’

Meanwhile, the Pound is likely to remain under pressure as markets wait for clarity on Brexit. If reports suggest the UK will crash out of the bloc without a deal, Sterling could slide.

Pound Euro (GBP/EUR) Exchange Rate Slumped as Draghi Says Eurozone Recession is a ‘Small Probability’

The Euro (EUR) edged up against the Pound on Thursday afternoon following the European Central Bank’s decision to cut its deposit rate to a fresh low. The bank also announced it would reintroduce quantitative easing to breathe life back into the Eurozone’s economy.

In his last major announcement, President Mario Draghi said that while the probability of a Eurozone recession has increased, it still remained a ‘small probability’ which likely provided the single currency with an upswing of support.

Meanwhile, on Friday the Euro could continue to edge up following the bloc’s Q2 wage growth data. If growth remains close to the first quarter’s near-decade high, EUR could rise.

Pound US Dollar (GBP/USD) Exchange Rate Muted as Fed Rate Cut Still on the Table

The Pound US Dollar (GBP/USD) exchange rate remained muted as data revealed US consumer inflation increased solidly in August.

Added to this further data revealed the number of Americans filing for unemployment dipped to a five-month low suggesting the labour market remains healthy.

However, today's inflation data is unlikely to stop the US Federal Reserve from cutting interest rates next week for the second time in 2019 to support its slowing economy.

Looking ahead to Friday, the ‘Greenback’ could edge up if August’s monthly retail sales jump higher than expected.

Pound Canadian Dollar (GBP/CAD) Exchange Rate Flat as Oil Prices Slide

The Canadian Dollar (CAD) remained muted against the Pound (GBP) on Thursday afternoon following disappointing housing data.

The Canadian Housing Price Index slumped by a further-than-expected -0.1% in July, and by annual rate of -0.4%.

Added to this, Thursday’s meeting of the OPEC+ alliance did not produce a decision on supply cuts, causing oil prices to slide, leaving the oil-sensitive ‘Loonie’ under pressure.

Looking ahead, it is likely any further slumps in oil prices could see the Canadian Dollar fall against a handful of currencies.

Pound Australian Dollar (GBP/AUD) Exchange Rate Left Flat despite Trump’s Tariff Delay

The Australian Dollar (AUD) remained muted against Sterling (GBP) on Thursday despite a rise in risk-appetite amongst investors as US-China trade tensions appeared to cool.

While Donald Trump’s decision to delay trade tariffs by two weeks was seen as a goodwill gesture, markets do not view this as a concrete sign a US-China trade agreement is within sight.

Looking ahead, due to a lack of economic data releases from Australia, it is likely any other reports suggesting US-China tensions are cooling will buoy the ‘Aussie’.

Pound New Zealand Dollar (GBP/NZD) Exchange Rate Muted despite Thawing of US-China Trade Tensions

Beijing’s announcement that a basket of US goods would be exempt from further tariff hikes provided an upswing in support for the New Zealand Dollar (NZD) on Thursday. President Donald Trump’s response provided further support for the ‘Kiwi’.

Later in the day, the pairing was left muted, following the European Central Bank’s (ECB) rate decision.

Looking ahead, the Pound New Zealand Dollar (GBP/NZD) exchange rate could edge up if the Business NZ PMI continues to fall further into contraction territory.

As of Thursday, 12th September 2019, the Pound Sterling currency rates mentioned within this news item were as follows:

GBP EUR exchange rate was 1.115, GBP USD exchange rate was 1.2334, GBP AUD exchange rate was 1.7971, GBP NZD exchange rate was 1.9265, GBP CAD exchange rate was 1.6295, and GBP CNY exchange rate was 8.732.
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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