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Pound Exchange Rates Rise as Traders Process #Budget2017

Published: 22 Nov at 4 PM Tags: Euro, Dollar, Pound Sterling, America, UK, Eurozone, Australian Dollar, New Zealand Dollar, Canadian Dollar, Australia, New Zealand, USA, Canada,

Pound Sterling (GBP)

After the delivery of what some have classified as a ‘boring’ budget, the Pound has seen a 0.3% rise against the US Dollar, Australian Dollar and New Zealand Dollar.

Among the notable GBP losses has been a minor dip against the Euro, due to both currencies being in demand today.

Traders appear to be cautiously optimistic in the wake of the budget delivery, although much of the focus has been on later positive news instead of an early negative.

Chancellor Philip Hammond opened his budget statement with gloomy Office of Budget Responsibility figures, which featured growth estimate downgrades until at least 2021.

The Pound rise may instead be because of optimism about the stamp duty freeze on certain properties, something that the OBR has nonetheless also criticised.

As the dust settles, the Pound could see some movement on Thursday’s GDP figures for Q3.

Estimates are for no real change over Q3, but at the same time business investment is predicted to drop sharply for the third quarter.

This could trigger a Pound drop, given that static growth will play into the pessimistic OBR outlook.

Euro (EUR)

The Euro has firmed against the Pound and US Dollar today, as a result of trader responses to recent European Central Bank (ECB) comments.

ECB official Benoit Coeure has largely had a positive reception, after stating that the European Central Bank (ECB) could start slowing or even reversing quantitative easing.

This is the ECB’s bond-buying program, which has resulted in a vast number of assets being purchased to try and stimulate the Eurozone economy.

While Coeure is not on the same level as ECB President Mario Draghi, his words still hold weight as this recent Euro advance shows.

The Euro might slip back against its peers on Thursday if Eurozone-wide PMI activity measures prove disappointing.

US Dollar (USD)

In the gap between poor US data and high-impact Federal Reserve minutes, the US Dollar has fallen across the board.

This unimpressive performance has been caused by the durable goods orders reading for October.

During the month, traders have been disappointed because orders have fallen from 2.2% to -1.2%, instead of rising to 0.3% as forecast.

In the near-term, the US Dollar could be affected by the release of 2017’s penultimate Federal Reserve minutes.

These will cover the November interest rate decision, which saw the Fed leave interest rates at 1.25%.

The only thing of interest before next year’s decisions is the December rate meeting, which many believe will see the Fed execute a rate hike to 1.50%.

If the minutes do suggest a December rate hike is still on the cards, the US Dollar could rise; because this has already been priced in, however, any gains may be minimal.

Australian Dollar (AUD)

Forecast-beating construction stats have failed to boost the Australian Dollar today, which has instead tumbled against most regular peers.

The Australian Dollar has struggled against the Pound and Euro, only managing a small rise against the weaker US Dollar.

There has been little AU data out today, with traders mainly focusing on a Reserve Bank of Australia (RBA) warning that AU businesses are partly to blame for slow wage growth.

AUD traders will be left in a lurch until the coming week, given a shortage of AU data over November 23rd and 24th.

The next major domestic news will be building permit figures out on November 29th.

New Zealand Dollar (NZD)

Claims that the new Labour-NZ First government could lead New Zealand into a recession have struck a nerve among traders today, devaluing the New Zealand Dollar.

The currency has fallen against most of its regular peers, excepting the slightly worse-off US Dollar.

Forbes contributor Jared Dillian has warned that government policies to ban foreign home ownership in New Zealand might trigger ‘a real estate crash’.

He has additionally cautioned that planned reformation at the Reserve Bank of New Zealand (RBNZ) might cause more harm than good.

As the new government has yet to prove itself, traders have been wary about committing fully to the NZD at present.

The currency might fall further on November 22nd, when Q3 retail sales are tipped to decline.

Canadian Dollar (CAD)

The Canadian Dollar has posted gains against the Pound and US Dollar today, with the only real loss coming against the Euro.

Yesterday’s wholesale sales stats showed a -1.2% drop in September, although economists are more optimistic about upcoming retail sales data out on Thursday.

In the latter case, analysts believe that sales will rise out of negative ranges on the month in September.
As of Wednesday, 22nd November 2017, the Pound Sterling currency rates mentioned within this news item were as follows:

GBP EUR exchange rate was 1.127, GBP USD exchange rate was 1.3317, GBP AUD exchange rate was 1.7492, GBP NZD exchange rate was 1.9365, and GBP CAD exchange rate was 1.6921.
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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