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Euro Falls Further Out of Favour Today with Renewed Market Slump Weighing on the Pound

Published: 26 Aug at 12 PM Tags: Euro, Dollar, Pound Sterling, America, Eurozone, Australian Dollar, New Zealand Dollar, Canadian Dollar, Australia, New Zealand, USA, Canada, China, Germany,

Pound Sterling
A bit of positive data arrived for the Pound this morning, as the BBA Loans for House Purchase came in slightly stronger than expected to post an increase at 46,033. With the global stock market rout apparently not entirely over though after yesterday’s burst of optimism and resurgence, as the FTSE 100 dropped by 1.5% at the start of trading, Sterling is not entirely out of the woods. As trader sentiment turns the Pound is beginning to flag in spite of the domestic data, facing declines against many of the majors as a round of apparent profit-taking drives up rivals.

Business sentiment is on the rise in Germany, with yesterday’s IFO surveys posting a trio of improved results to shore up the common currency. With European Central Bank Vice President Vitor Constancio having later proved somewhat dovish over the possibility of imminent interest rate loosening to counteract the effects of the current turmoil pundits were inclined to move away from the Euro towards higher yielding currencies on the back of market stabilisation. While another global downtrend has manifested this morning the common currency remains out of favour with investors, further eroding its bullish gains from Black Monday.

US Dollar
Although the Dow Jones opened markedly higher yesterday and the People’s Bank of China (PBoC) moved to stabilise the domestic market with a 0.25% interest rate cut US stocks were ultimately unable to maintain traction. As the initial optimism of the intervention wore thin, the general conviction being that the loosening will do little if anything to solve the underlying issues that have been slowing down the global economy, trading returned to a bearish pace. A good result for the US Consumer Confidence index for August, rising significantly above forecast to 101.5, was inevitably overshadowed by these continuing fluctuations.

Australian Dollar
With decreased bets on a September interest rate rise from the Fed and the PBoC’s attempt at intervention yesterday the ‘Aussie’ was naturally buoyed up against many of the majors. In spite of the Australian stock market opening 1% lower today and global gains of the past twenty-four hours starting to rapidly recede the antipodean currency remains in positive territory, possibly spurred in part by the PBoC making another injection of 140 billion Yuan into the market.

New Zealand Dollar
A less than impressive Trade Balance was released for New Zealand overnight, showing a worse than anticipated deficit of -2690 million, but this blow was easily eclipsed by further developments on the global stock markets. Concerns do not appear to be weighing too significantly on the ‘Kiwi’ today as it continues to post gains against many of the majors as the currency gradually claws itself away from the multi-year lows it had been forced to on Black Monday.

Canadian Dollar
In spite of oil values stabilising in the wake of the PBoC intervention in Beijing the extremity of the current supply glut has prevented the ‘Loonie’ from elevating itself too greatly. Although the commodity currency is now on a definite uptrend against rivals such as the US Dollar and Euro it remains in the near region of Monday’s lows, with further market volatility holding the potential to send it sliding back.
As of Wednesday, 26th August 2015, the Pound Sterling currency rates mentioned within this news item were as follows:

GBP EUR exchange rate was 1.3649, GBP USD exchange rate was 1.5477, GBP AUD exchange rate was 2.1726, GBP NZD exchange rate was 2.3998, GBP CAD exchange rate was 2.0581, and GBP CNY exchange rate was 9.9226.
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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