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Daily Currency Update: US Dollar Drop Boosts Pound Sterling and Euro Exchange Rates

Published: 20 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)

The Pound has risen against almost all of its regular currency peers today, including the Euro and US Dollar.

This mass-appreciation is recent, with the UK currency having been supported by a delayed reaction to the morning’s retail sales figures.

These revealed falling but better-than-expected levels of sales growth during August, which raised optimism about UK economic resilience.

Brexit talks haven’t been quite so supportive today, but the Pound’s appreciation shows that GBP traders are currently ignoring this negative development.

The Pound might be affected by Friday’s Bank of England (BoE) quarterly bulletin, which could provide additional late-week support if it backs perceptions of UK economic stability.

Euro (EUR)

Today’s Euro movement has mainly been caused by the US Dollar, which has fallen and raised demand for the comparatively stable single currency.

Although this afternoon’s Eurozone consumer confidence flash has revealed a worse-than-expected decline in sentiment levels, the Euro has still risen against the US Dollar and traded tightly against the Pound.

Today’s Euro gains could turn to losses on Friday morning, if Eurozone PMI readings show forecast-matching slowdowns in reported activity during September.

US Dollar (USD)

The US Dollar has been a headline currency today, having fallen in value due to shifting attitudes about the US-China trading conflict.

Wednesday saw the US and China impose fresh trading tariffs on each other, but the immediate reaction was that the Chinese tariff plans could have been worse.

Another sign that China might have the upper hand is that Chinese officials are reportedly going to decrease tariffs on imports from some countries, excluding the US.

Alongside assurances to not deliberately devalue the Chinese Yuan, these Chinese government announcements have made the US Dollar less appealing.

The US Dollar might recover lost ground on Friday if US personal income and spending levels are reported higher, although trade war concerns might overshadow any domestic data.

Australian Dollar (AUD)

A drop in US Dollar demand has pushed up interest in the Australian Dollar today, leading to a rise against the US Dollar and the Chinese Yuan.

There has been limited Australian economic data out today, but the fallout of the US Dollar decline has more than made up for a lack of domestic support.

Australian Dollar traders have a long wait ahead before the next national economic data comes out, so the next influencer on AUD movement could be the US Dollar.

New Zealand Dollar (NZD)

The New Zealand Dollar has fallen against the stronger Pound and Euro today, but has elsewhere risen against the US Dollar and peers like the Canadian Dollar.

This appreciation has come from increased demand for commodity currencies after the US Dollar drop, as well as highly supportive national GDP data.

Wednesday’s New Zealand GDP figures showed a faster pace of economic activity on the quarter and the year in Q2 2018.

There isn’t any high-impact NZ economic data left this week, so the New Zealand Dollar could instead be affected by any more updates on the US-China trading situation.

Canadian Dollar (CAD)

Although the US Dollar’s decline has boosted most commodity currencies today, the Canadian Dollar has been an exception – the Canadian currency has fallen against the Euro and the Pound.

This loss despite favourable conditions has been caused by a recent warning from US President Donald Trump that has lowered crude oil prices, to the disadvantage of Canadian oil exporters.

In light of a recent rise in crude oil prices, Mr Trump has demanded that OPEC lower oil prices – despite the questionable authority behind this statement, crude costs have still fallen.

Looking ahead, the Canadian Dollar could fall further on Friday when the afternoon’s inflation rate figures come out.

Measure changes to the rate of price growth in August, these readings are expected to show a slowdown in all fields.

This will be better news for Canadian households, but more importantly won’t make a near-term Bank of Canada (BOC) interest rate hike any more likely.
As of Thursday, 20th September 2018, the Pound Sterling currency rates mentioned within this news item were as follows:

GBP EUR exchange rate was 1.1266, GBP USD exchange rate was 1.327, GBP AUD exchange rate was 1.8201, GBP NZD exchange rate was 1.9844, GBP CAD exchange rate was 1.7125, and GBP CNY exchange rate was 9.0855.
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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