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European Central Bank Leaves Monetary Policy Unchanged

Published: 21 Apr at 1 PM Tags: Euro, Dollar, Pound Sterling, America, Eurozone, Australian Dollar, New Zealand Dollar, Canadian Dollar, Australia, New Zealand, USA, Canada,

Pound Sterling
News of poor retail sales and an overshoot in government borrowing have failed to weaken Pound Sterling today. Retail sales dropped -1.3% on the month and annual growth slowed from 3.6% to 2.7%, in both cases disappointing forecasts. Borrowing in March was lower-than-expected, coming in at -£4.1 billion rather than -£5.5 billion, yet final figures showed that George Osborne has exceeded his annual borrowing target by £1.8 billion. Despite multiple weakening factors, the Pound has posted strong gains against all of the majors today. Growing anticipation of an intervention in the ‘Brexit’ referendum by US President Barack Obama could be keeping trader sentiment buoyant.

The Euro has been performing inconsistently today, losing out to stronger currencies but also making some considerable gains. The approaching European Central Bank (ECB) decision had kept the common currency muted. As expected, the Governing Council left monetary policy as it was. Traders will now look towards the imminent speech from President Mario Draghi for hints on the likelihood of future policy change.

US Dollar
The US Dollar is making some gains today, helped by the uncertainty that was prevalent before the ECB decision. On a domestic front, investors are awaiting that latest jobless claims figures, which are expected to show a mild uptick in the number of people claiming out of work benefits. Appetite for USD may have been reawakened slightly by yesterday’s Existing Home Sales Figure, which bucked the recent trend of US data to print better-than-expected.

Australian Dollar
A rise in commodity prices has helped lend the Australian Dollar some strength today, although AUD growth is meeting resistance after reaching an 11-month high against the Euro and an 18-month high verses Pound Sterling. Business confidence in the first quarter was shown to have held steady; a positive outcome considering the global developments witnessed since the start of the year.

New Zealand Dollar
Recent data from New Zealand has provided little in the way to motivate the New Zealand Dollar into a rise. Job advertisements rose 2.9%, while net migration slowed to 5,330. Today’s data has shown a small uptick in consumer confidence, with a 1.7% rise taking the index for April up to 120.0. On a less-positive note, credit card spending slowed from 7.3% to 4.8% on the year, falling -1.1% on the month in March. The New Zealand Dollar has remained weak across the board today.

Canadian Dollar
Oil may have strengthened above US$45 per barrel, but the Canadian Dollar has remained weak today. Traders may be taking profit on the Canadian Dollar after recent spikes, especially with the key Consumer Price Index figures due out tomorrow. Predictions are for a slowing in inflation, which would lead to CAD depreciation. As a result, traders are realising their gains now to avoid making a potential loss on the back of tomorrow’s figures.

As of Thursday, 21st April 2016, the Pound Sterling currency rates mentioned within this news item were as follows:

GBP EUR exchange rate was 1.2683, GBP USD exchange rate was 1.4317, GBP AUD exchange rate was 1.8497, GBP NZD exchange rate was 2.0707, and GBP CAD exchange rate was 1.822.
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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