Published: 24 Jan at 5 PM Tags: Euro, Dollar, Pound Sterling, America, Eurozone, Australian Dollar, New Zealand Dollar, Canadian Dollar, Australia, New Zealand, USA, Canada, France, Germany,
It was a volatile trading day for the Pound, which fluctuated sharply in the wake of the Supreme Court judgement on Article 50. While investors were reassured that the government would have to pass an Act of Parliament before formal exit proceedings from the EU can commence the verdict nevertheless put downside pressure on Sterling. This was due to the judges noting that the devolved assemblies do not have to be consulted over Brexit, stoking fears of a second Scottish independence referendum.
Confidence in the single currency was dented by a disappointing German Services PMI, which prompted speculation that the Eurozoneâ€™s powerhouse economy is in a less robust state. Given that much of Germany
â€™s recent economic activity has been driven by domestic consumers this easing in growth weighed heavily on the Euro. However, the latest raft of Eurozone PMIs was not entirely discouraging, with France
showing better-than-expected growth across the board.
The appeal of the â€˜Greenbackâ€™ has been limited at the start of the week, thanks to an increased sense of market uncertainty over the economic policies of Donald Trump. Jitters over the implications of the new administration have dragged the US Dollar lower against its rivals, particularly as domestic data also proved discouraging. Existing home sales were found to have plunged in December, indicating a weaker housing market and somewhat dampening expectations of an imminent Fed rate hike.
An increased sense of risk aversion limited demand for the â€˜Aussieâ€™ on Tuesday, with markets unsettled by the USâ€™ withdrawal from the Trans Pacific Partnership. The antipodean currency was also weighed down by the ANZ Roy Morgan weekly consumer confidence index, which showed that the optimism of the New Year had started to fade. This was not seen to bode well for the outlook of the Australian economy, exacerbating speculation that the Reserve Bank of Australia
(RBA) could cut interest rates again.
Decemberâ€™s Services PMI offered further evidence of the strong underlying fundamentals of the New Zealand economy, with the index strengthening to a robust 58.4. Although the appeal of risk-sensitive currencies was somewhat limited by the potential scrapping of the TPP the mood towards the â€˜Kiwiâ€™ remained relatively positive. With domestic data continuing to impress there seemed little compelling reason to sell out of the New Zealand Dollar at this juncture.
Oil prices returned to an uptrend on Tuesday, helping to push the Canadian Dollar higher against many of the majors. The weakness of the US Dollar and signs that OPEC is continuing to honour its pledge to cut production have both supported the recovery of crude, in spite of signs that US output could rise further. However, with risk appetite fragile the â€˜Loonieâ€™ may struggle to hold onto its current gains for long.
As of Tuesday, 24th January 2017, the Pound Sterling currency rates mentioned within this news item were as follows:
GBP EUR exchange rate was 1.1682, GBP USD exchange rate was 1.2532, GBP AUD exchange rate was 1.6507, GBP NZD exchange rate was 1.7277, and GBP CAD exchange rate was 1.6486.