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Soft Consumer Confidence sees Sterling Decline, Euro Advances on Eurozone Core Inflation Gain and US Dollar Trends Higher on Fed Rate Hike Expectations

Published: 31 Jul at 1 PM Tags: Euro, Dollar, Pound Sterling, America, UK, Eurozone, Australian Dollar, New Zealand Dollar, Canadian Dollar, Australia, New Zealand, USA, Canada, China, Germany,

Pound Sterling (GBP)
The British asset declined versus the majority of its currency rivals on Friday afternoon in response to less-than-ideal domestic data results. GfK Consumer Confidence was forecast to drop from 7 to 5 in July, but the actual result dropped to 4. Additionally, the Lloyds Business Barometer declined from 55 to 50 in July. ‘In part, driven by anxiety over the potential Grexit melt-down and global uncertainty, consumers are feeling less secure about wider economic prospects for the country as a whole this month,’ Joe Staton, an executive at market research company GfK said.
The Confederation of British Industry (CBI) reported that British growth ‘firmed up’ in the three months to July thanks to the robust services sector expansion. The report had minimal impact on the Pound, however, as trader focus was dominated by the poor data publications.

Euro (EUR)
Although European economic data produced mixed results during Friday’s European session, the shared currency advanced versus many of its currency competitors. German Retail Sales dived by -2.3% in June on the month, but gained by 5.1% on the year. However, Eurozone Unemployment Rate held at 11.1% in June despite the median market forecast drop to 11.0%. In contrast, Eurozone Core Consumer Prices came in at 1.0% in July; bettering the market consensus of 0.8%. ‘The [inflation] figure remains well below the European Central Bank's (ECB) inflation target of just under two per cent, meaning there is still plenty of work for the European Central Bank's €60bn a month bond-buying programme to do,’ stated Jessica Morris writing for City A.M.

US Dollar (USD)
After Thursday’s data showed the US Gross Domestic Price Index bettered expectations, futures traders brought forward bets as to the timing of a Federal Reserve rate hike. Many analysts are predicting a September liftoff despite vague responses to timing from officials after the Federal Open Market Committee (FOMC) held the cash rate in the most recent meeting. University of Michigan Confidence, due for publication later on Friday, has the potential to provoke changes for the US asset.

Canadian Dollar (CAD)
As traders prepare for Canadian Gross Domestic Product Data due for publication on Friday afternoon, the ‘Loonie’ (CAD) softened versus many of its currency rivals. The depreciation can be linked to expectations that Canada’s economy slowed down in response to the sharp drop in oil prices.

Australian Dollar (AUD)
With China’s stock market having dropped to a six-year low, the ‘Aussie’ (AUD) declined versus many of its currency rivals. Generally damp market sentiment, amid fears that China’s economic slowdown will have adverse effects on the global market, also weighed on demand for the South Pacific asset. Lower-than-expected Private Sector Credit in June failed to meet with expected growth which aided the Australian Dollar downtrend.

New Zealand Dollar (NZD)
With more and more analysts predicting further Reserve Bank of New Zealand (RBNZ) benchmark rate cuts to come, the ‘Kiwi’ (NZD) is trending lower versus its currency rivals. The depreciation was aided by damp market sentiment and bearish commodity prices. Of particular detriment is falling dairy prices which show little sign of a swift recovery.
As of Friday, 31st July 2015, the Pound Sterling currency rates mentioned within this news item were as follows:

GBP EUR exchange rate was 1.4222, GBP USD exchange rate was 1.5621, GBP AUD exchange rate was 2.1387, GBP NZD exchange rate was 2.37, GBP CAD exchange rate was 2.045, and GBP CNY exchange rate was 9.7004.
Patrick James About Author: (289 Posts)Patrick completed his economics degree just as the global financial crisis struck in 2008. In the intervening years Patrick has made his mark, climbing to a prominent position within a large financial services provider. As part of his role Patrick uses his expertise to advise companies of the best ways to safeguard against currency risk.

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