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Currency Market Unmoved by Vague Fed; GBP Gains, EUR Softens and USD Holds Steady

Published: 30 Jul at 11 AM Tags: Euro, Dollar, Pound Sterling, America, UK, Eurozone, Australian Dollar, New Zealand Dollar, Canadian Dollar, Australia, New Zealand, USA, Canada, China, Germany, Greece,

Pound Sterling (GBP)
The British Pound advanced versus many of its currency competitors on Thursday despite a distinct lack of domestic data to provoke volatility. The appreciation was the result of a survey which showed personal insolvency in the UK dropped to its lowest level in nearly ten years. That is a drop of 29.3% annually. Also aiding the Sterling appreciation was better-than-anticipated Royal Bank of Scotland quarterly profit. The UK government is planning on selling its shares in RBS so improving profit is a positive for Britain.

Euro (EUR)
As Greek Prime Minister Alexis Tsipras struggles to maintain power with increasingly unhappy Syriza back benchers, the shared currency declined. Tsipras has threatened a snap election which could seen yet another period of political uncertainty; something that Athens cannot afford to deal with as the third bailout package is far from being finalised at this stage. Additional Euro losses are the result of disappointing labour market data out of Germany. With German inflation data still to be released, Euro volatility is likely.

US Dollar (USD)
The US Dollar saw a muted response from the Federal Open Market Committee (FOMC) interest rate decision. The accompanying statements showed no real vision and gave no clear indication as to the timing of a benchmark rate hike. Fed officials failed to adequately address the lack of inflationary pressure in the light of crashing commodity prices, or the potential fallout from the economic slowdown in China. The US Dollar continues to trend statically ahead of Gross Domestic Product data due for publication later this afternoon.

Canadian Dollar (CAD)
Although crude oil prices edge higher after US stockpiles data indicated a shock reduction, the ‘Loonie’ (CAD) is trending lower versus its major currency peers. The depreciation is likely trader hesitance ahead of Friday’s highly significant growth data. Should May’s Canadian growth fail to meet the flat line target; Canada will be officially entering a recession.

Australian Dollar (AUD)
The Australian Dollar dived versus its peers during Thursday’s Australasian session in response to particularly disappointing building approvals data. The sharp drop in building approvals will stoke fears regarding the current housing crises as more and more citizens get priced out of the market. The ‘Aussie’ (AUD) managed to recover some of its losses as Thursday’s European session progressed, however, thanks to the third consecutive day of iron ore price increases.

New Zealand Dollar (NZD)
After the Reserve Bank of New Zealand (RBNZ) signalled more rate cuts to come, the ‘Kiwi’ (NZD) softened versus its major rivals. The economic slowdown in China and bearish dairy prices continue to weigh on demand for the New Zealand asset.

As of Thursday, 30th July 2015, the Pound Sterling currency rates mentioned within this news item were as follows:

GBP EUR exchange rate was 1.4267, GBP USD exchange rate was 1.5596, GBP AUD exchange rate was 2.1401, GBP NZD exchange rate was 2.3603, GBP CAD exchange rate was 2.0286, and GBP CNY exchange rate was 9.6848.
Dominic Lee About Author: (473 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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