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British Pound Strengthens ahead of Labour Market Data, Euro Halts losses as Greek Woes Priced-In and US Dollar Holding Steady ahead of FOMC

Published: 17 Jun at 10 AM Tags: Euro, Dollar, Pound Sterling, America, UK, Eurozone, Australian Dollar, New Zealand Dollar, Canadian Dollar, Australia, New Zealand, USA, Canada, Germany, Greece,

Pound Sterling (GBP)
Having strengthened on Tuesday, despite concerns over a sustained period of low inflation in the UK, the Pound is holding a strong position on Wednesday. The initial appreciation was sparked by consumer prices having moved away from negative territory in May, something which Bank of England (BoE) officials had predicted.
Wednesday is likely to see Sterling volatility with several important data publications due for release. Minutes from the most recent Bank of England (BoE) interest rate decision may be of interest although the central bank didn’t make any changes. Should there be any signs of policymakers dissenting from the current outlook the Pound is likely to rally. Labour market data will also be of significance.

Euro (EUR)
After economic confidence data showed a slump in confidence in both Germany and the wider Eurozone, the shared currency dived versus its major peers. The fraying relationship between Athens and Eurozone officials also weighed on demand for the common currency.
The Euro halted losses on Wednesday morning, however, amid fears that the Greek woes had already been priced-in. Eurozone inflation data, due for publication later on Wednesday morning, is likely to provoke changes for the shared currency.

US Dollar (USD)
Demand for safe-haven assets saw the US Dollar advance during Tuesday’s European session. Mixed domestic data results had minimal impact with geopolitical tensions in Europe dominating trader focus.
With the Federal Open Market Committee (FOMC) interest rate decision later this evening, the US Dollar is unlikely to see any significant movement. Fears that the Fed will have a dovish outlook may cause the US asset to soften ahead of the decision.

Australian Dollar (AUD)
The Australian Dollar softened on Tuesday after minutes from the most recent Reserve Bank of Australia (RBA) policy meeting showed policymakers were willing to intervene in the market in order to devalue the ‘Aussie’ (AUD). Wednesday has seen a continuation of the depreciation as the geopolitical situation in Greece weighs on demand for high-yielding, risk-correlated currencies.

New Zealand Dollar (NZD)
The New Zealand Dollar has generally been trending in a weak position after the Reserve Bank of New Zealand (RBNZ) surprised the market by cutting the benchmark interest rate. Difficulties in the dairy market have also weighed on demand for the ‘Kiwi’. Wednesday has seen the Oceanic currency continue to trend lower versus most of its peers with dampened market sentiment weighing on demand.

Canadian Dollar (CAD)
The Canadian Dollar hit a 3-month low against the Pound on Tuesday despite positive domestic data and crude prices edging higher. The depreciation is likely the results of trader risk-aversion amid uncertainty with regards to Greece’s future as part of the Eurozone. The ‘Loonie’ (CAD) continued to fall on Wednesday morning despite crude oil prices rising.
As of Wednesday, 17th June 2015, the Pound Sterling currency rates mentioned within this news item were as follows:

GBP EUR exchange rate was 1.3959, GBP USD exchange rate was 1.583, GBP AUD exchange rate was 2.0465, GBP NZD exchange rate was 2.2881, and GBP CAD exchange rate was 1.9369.
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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