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Sterling Bullish on BoE Bets, Euro Softens ahead of European Commission and US Dollar Slides on Dovish Fed

Published: 18 Jun at 10 AM Tags: Euro, Dollar, Pound Sterling, America, UK, Eurozone, Australian Dollar, New Zealand Dollar, Canadian Dollar, Australia, New Zealand, USA, Canada, China, Greece,

Pound Sterling (GBP)
The Pound rallied versus its major peers on Wednesday after positive labour market data stoked bets that the Bank of England (BoE) will hike the cash rate before the close of the year. Of particular note was a robust pickup in average earnings which will likely have a positive impact on consumer confidence and encourage spending. Thursday has seen the British asset holding a strong position ahead of retail sales data.

Euro (EUR)
Although Eurozone inflation met with the median market forecast 0.3% on Wednesday, the shared currency slumped versus its peers. The depreciation was the result of speculation that Greece will not be able to secure bailout funds before credit runs dry. Thursday will see the European Commission make a decision on whether to provide the Hellenic nation with aid. If they decide not to, it could be the last opportunity Athens has and could prompt an exit from the Eurozone.

US Dollar (USD)
The US asset softened versus many of its rivals during Wednesday’s European session as traders speculated that the Federal Open Market Committee (FOMC) would remain dovish in their policy outlook. After it transpired that the FOMC held the cash rate and stated that liftoff could be delayed until December, the US asset softened versus many of its competitors. Thursday has seen the ‘Greenback’ (USD) holding losses as traders await the Consumer Price Index.

Australian Dollar (AUD)
Dampened risk sentiment amid geopolitics in Europe weighed on demand for the Australian Dollar on Wednesday. However, after the FOMC held the cash rate and futures traders delayed bets as to the timing of a liftoff, the ‘Aussie’ (AUD) advanced. The gains were pared back a little on Thursday after domestic data and data out of China printed disappointingly.

New Zealand Dollar (NZD)
The New Zealand Dollar also advanced in response to the dovish FOMC. However, most of those gains were lost after first-quarter Gross Domestic Product came in at only 2.6% on the year, well below the market consensus of 3.1% growth. The ‘Kiwi’ (NZD) is still holding gains over many of its rivals on Thursday, however, thanks to demand for high-yielding assets following the weak Federal Reserve policy outlook.

Canadian Dollar (CAD)
The Canadian Dollar strengthened a little on Thursday after the US rate hike delay eases disparity between the two nations. ‘Loonie’ (CAD) gains have been somewhat sluggish, however, with crude oil prices dropping.
As of Thursday, 18th June 2015, the Pound Sterling currency rates mentioned within this news item were as follows:

GBP EUR exchange rate was 1.3963, GBP USD exchange rate was 1.5879, GBP AUD exchange rate was 2.0346, GBP NZD exchange rate was 2.2894, GBP CAD exchange rate was 1.9404, and GBP CNY exchange rate was 9.8577.
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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