Best Exchange Rates

Sterling Soars, Yen the Casualty at the End of Eventful Week

Categories: AUD, CAD, CHF, EUR, GBP, JPY, Markets, News, NZD, USD

The British pound rose on Friday to its highest level against the dollar since the UK’s historic ‘Brexit’ vote in June of last year.

By lunchtime in London, the pound was buying $1.3616, capping a brilliant fortnight in which it has risen from rates close to $1.29. On minor profit taking, the currency settled back at $1.3583, for a weekly gain of 3.1%.

Britain’s currency was unfazed in the face of a terrorist attack in London on Friday morning, which left 29 people injured and prompted the government to raise its terror threat level to “critical.”



GBP/USD 3 Month Chart

The pound benefitted this week after the Bank of England struck a hawkish tone at its meeting on Thursday, with bank governor Mark Carney saying that an increase in UK interest rates would be appropriate “in the coming months.”

Comments from Gertjan Vlieghe – one of the BoE’s most dovish committee members – solidified expectations for an imminent rate hike when he said during a speech in London on Friday that “the data is increasingly suggesting that we are approaching the moment when [the] bank rate may need to rise.”

GBP/USD was also assisted towards the end of the week by the dollar side, with the US currency slumping in spite of data on Thursday which showed US inflation rising to a seven-month high of 0.4% in August, from 0.1% in July. ‘Core inflation’, which strips out the volatile food and energy components of the Consumer Price Index, rose to 0.2%, from 0.1%.

The dollar wasn’t helped on Friday after investors learned that US retail sales fell in August by 0.2%, against expectations for an increase of 0.1%. Adding insult to injury, July’s increase of 0.6% was revised down to 0.3%.

Weakness in the dollar took the US Dollar Index (DXY) back below 92 (to 91.88) but the index remained marginally up on the week (+0.5%).

The Japanese yen was one of only two majors to post a loss against the dollar on Friday.

The yen, which normally benefits in the presence of geopolitical uncertainty, was left unwanted as investors shrugged off North Korea’s latest missile test and sought higher-yielding currencies. This pushed USD/JPY as high as ¥111.33 during Friday’s European session before some yen support was found and the rate fell to ¥110.83. The yen lost 2.5% on the week.



EUR/USD 3 Month Chart

The euro rose marginally against the dollar, supported by Friday’s Eurostat data which showed eurozone wage growth at its highest level in two years. Second-quarter growth of 1.8% makes it more likely than ever that the European Central Bank will announce plans to scale back its asset purchase program at its next meeting.

EUR/USD climbed on the day to $1.1941 but ended the week 0.6% lower. The pair remains close to long-term highs.

The Swiss franc strengthened on Friday in the aftermath of Thursday’s meeting of the Swiss National Bank, at which the bank dropped its longstanding message of the franc being “significantly overvalued.” This, however, wasn’t enough to make back losses from the Monday-Wednesday period and the franc lost 1.6% on the week, taking USD/CHF to Fr. 0.9591.

The Canadian dollar took the week off.

The ‘loonie’ has surged in recent months on the back of two interest rate hikes by the Bank of Canada but USD/CAD spent most of the week drifting sideways on low volatility. The pair’s closing rate of C$1.2196 marked a negligible weekly loss for CAD of 0.3%.

Of the Antipodean currencies, the New Zealand dollar was best.

Against USD, the ‘kiwi’ climbed by 0.95% on Friday and by 0.4% on the week to $0.7288. The Australian dollar was unchanged on the day and fell 0.7% on the week to $0.7999.

Joel Wright Author: Joel Wright

Joel has been involved in the markets for the past 10 years. During that time he’s worked in market analysis teams in London, in the financial technology sector in Singapore – working mostly with automated trading tools and algorithms – and most recently he’s been planning FX risk hedging for an SME in Bangkok. Joel has a first-class honours degree in Financial Services and currently writes about foreign exchange for several global businesses.

You can get in touch with Joel via email here or via the contact page.

Please note that the opinions of our authors are their own and do not reflect the opinion of Best Exchange Rates and should not be taken as a reference to buy or sell any financial product. Full Disclaimer

BER Newsletter

Subscribe for the latest exchange rates, currency news and special offers directly to your inbox.

Best Exchange Rates - We make it Easy to Compare Exchange Rates & Fees of Banks and Currency Exchange & Payment Providers


Level 2, AMP Tower, 50 Bridge Street, Sydney, NSW 2000, Australia

Disclaimer | Copyright | Privacy Statement


DISCLAIMER

Best Exchange Rates is an information only service. By browsing on the website, using our comparison tools or FX provider referral service, you are asking Best Exchange Rates to provide you with information about currency exchange products & services from multiple financial institutions.

We will try to show you a range of products & services in response to your request for information. The search results do not include all providers and may not compare all features relevant to you. In giving you product information we are not making any suggestion or recommendation to you about a particular product.

If you decide to conduct foreign exchange you will deal directly with a financial institution, and not with Best Exchange Rates. Rates and product information should be confirmed with the relevant financial institution, see our terms of use for further details.

Best Exchange Rates may receive fees or other benefits in relation to activity on the Best Exchange Rates website. Best Exchange Rates may receive remuneration for vendor referral links. Please note that the opinions of our authors are their own and do not reflect the opinion of Best Exchange Rates and should not be taken as a reference to buy or sell any financial product.

Read our Full Terms of Service



COPYRIGHT

This website and its contents are the copyright of BEST EXCHANGE RATES PTY LTD © 2009-17. All rights reserved.

Any redistribution or reproduction of part or all of the contents in any form is prohibited other than the following. You may print or download contents to a local hard disk for your personal and non-commercial use only. You may copy some extracts only to individual third parties for their personal use, but only if you acknowledge the website as the source of the material.

You may not, except with our express written permission, distribute or commercially exploit the content. You may not transmit it or store it on any other website or other form of electronic retrieval system.

For more details or request distribution right please contacxt us here.