Despite the release of some upbeat domestic data the Pound (GBP) remained under pressure yesterday as Brexit uncertainty persisted.
While the UK government reported a larger than expected budget surplus in July, markets continue to fear that a possible delay to Brexit trade talks will give the UK little time to negotiate a meaningful agreement.
Meanwhile Sterling investors will be closely watching tomorrow’s GDP data amidst fears that a revision in June’s retail sales may have hampered the UK’s growth prospects in the second quarter.
The Pound Euro (GBP EUR) exchange rate continued to slide on Tuesday despite German economic sentiment plummeting in August.
ZEW’s economic sentiment index tumbled from 17.5 to 10 this month as weakening exports and the widening emissions scandal in Germany’s automobile industry prompted a gloomier outlook amongst economists.
However some better than expected PMI stats from Germany helped the single currency push to a new ten-month high this morning as the manufacturing index for August soared from 58.1 to 59.4.
Sterling fell by around half a cent to a new eight-week low against the US Dollar (USD) yesterday as Brexit uncertainty continued to hang over Sterling.
However the ‘Greenback’ found its advance slowed later in the session following remarks by President Trump warning that he may terminate the NAFTA trade treaty after the first round of renegotiations ended unsuccessfully on Sunday.
Meanwhile the US Dollar may find some strength again later this afternoon with the release of the latest US New Home Sales figures as analysts forecast that sales will have risen slightly in July.
The Pound Canadian Dollar (GBP CAD) exchange rate slumped to its lowest levels since January on Tuesday as Canadian core retail sales rebounded strongly in June, although the comments from Trump regarding the possible scrapping of the NAFTA treaty caused the ‘Loonie’ to relinquish much of its gains in overnight trade.
Sterling finally found its feet against the Australian Dollar (AUD) overnight on Tuesday as a sudden downtrend in commodity prices caused ‘Aussie’ sentiment to rapidly decline.
New Zealand Dollar
The Pound New Zealand Dollar (GBP NZD) exchange rate also rallied during the Asian session last night as the ‘Kiwi’ was also weakened by the drop in commodity prices.
This week the US Dollar was touching three-year highs when valued against a basket of major currencies. The greenback’s traditional role as one of the safe-haven currencies is helped by a domestic economy that is largely immune to the threats of the coronavirus.
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