SendMoney.org.uk

Compare exchange rates, send money abroad and online

Thu 28 Mar 2024 22:00GMT

Pound (GBP) Pressured by UK Political Uncertainties as US Dollar (USD) Recovers

Published: 29 Jan at 5 PM Tags: Euro, Dollar, Pound Sterling, America, UK, Eurozone, Australian Dollar, New Zealand Dollar, Canadian Dollar, Australia, New Zealand, USA, Canada,

Pound Sterling (GBP)
While Sterling was supported by strong UK job data and growth projections last week, the Pound saw mixed performance on Monday due to fresh concerns about the stability of the UK government and how it may affect the Brexit process.

Over the weekend, reports emerged that UK Prime Minister Theresa May could face a vote of no-confidence if she does not clarify the UK government’s position on Brexit soon. With UK-EU trade negotiations expected to begin in March, analysts point out that it is still unclear whether the government will aim for a ‘hard Brexit’ or ‘soft Brexit’.

Political news is likely to take focus for Pound trade in the coming days, as Britain’s upcoming ecostats are unlikely to be particularly influential.


Euro (EUR)
Monday saw the Pound to Euro exchange rate slip from the week’s opening levels, but due to a lack of fresh Euro support the pair’s losses were limited.

Last week the Euro was boosted by the latest comments from European Central Bank (ECB) President Mario Draghi. Draghi stated that the Eurozone’s growth continued to best expectations and predicted that Eurozone inflation would be steady in the coming months.

However, Euro investors are now anticipating major upcoming Eurozone data before making any more moves on the currency. In particular, Wednesday’s Eurozone inflation report is likely to be highly influential.


US Dollar (USD)
The Pound to US Dollar exchange rate plunged on Monday, as UK political uncertainties helped the US Dollar to capitalise on what could be the start of a recovery rally.

The US Dollar has recently hit its cheapest levels in over a year against some major rivals like the Pound and Euro. As analysts have called the currency oversold, investors looked to buy the currency back from its cheap levels on Monday.

This week’s US Dollar recovery rally could hit a dead-end on Wednesday though, if the Federal Reserve’s January monetary policy decision is disappointing in some way.


Australian Dollar (AUD)
The Pound to Australian Dollar exchange rate tumbled on Monday, shedding some of the gains seen last week.

While there has been little domestic news supporting the Australian Dollar so far this week, Sterling has been pressured by UK political news and Australian Dollar investors are anticipating key Australian data due for publication in the coming days.

Tuesday will see the publication of NAB’s Australian business confidence survey from December and key Q4 Consumer Price Index (CPI) data will be published on Wednesday.


New Zealand Dollar (NZD)
Similarly to GBP/AUD, the Pound to New Zealand Dollar exchange rate slipped on Monday.

However, as investors remained disappointed with New Zealand’s Q4 inflation results, published last week, the New Zealand Dollar’s gains against the Pound were limited.

New Zealand Dollar movement could be influenced by NZ trade results from December during Tuesday’s Asian session, but if not it’s likely the Pound and risk-sentiment will drive GBP/NZD this week.


Canadian Dollar (CAD)
The Pound to Canadian Dollar exchange rate tumbled on Monday despite recent disappointing Canadian ecostats, as UK political uncertainties weighed on Sterling.

Market optimism over prices of oil, Canada’s most lucrative commodity, also boosted demand for the oil-correlated Canadian Dollar on Monday.

Sterling could continue to slip against the Canadian Dollar in the coming days if UK political concerns worsen and if Canadian growth data, due Wednesday, impresses investors. Canadian Dollar trade could also be influenced by the Federal Reserve’s January policy decision on Wednesday.
As of Monday, 29th January 2018, the Pound Sterling currency rates mentioned within this news item were as follows:

GBP EUR exchange rate was 1.1367, GBP USD exchange rate was 1.407, GBP AUD exchange rate was 1.7384, GBP NZD exchange rate was 1.9223, and GBP CAD exchange rate was 1.7359.
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.

Live Exchange Rates