The Pound (GBP) trended higher against the other majors overnight on Thursday as investors reacted poorly to news from the European and US markets.
Sterling was also strengthened this morning as the Bank of America revised its forecast for the Pound this year, suggesting GBP/USD will hold at around $1.25.
However, the Pound may struggle to advance later today as the UK’s latest GDP figures are expected to show that economic growth tumbled in the first quarter of 2017.
The Pound Euro (GBP EUR) exchange rate appreciated by around a cent in trading yesterday as the European Central Bank (ECB) voted to leave interest rates at a record low of 0%.
While ECB President Mario Draghi said that the Eurozone’s economic outlook was improving, he told reporters that the bank still saw the need to continue its monetary accommodation to allow inflation to strengthen.
The single currency was also pressured this morning by the release of France’s GDP figures as growth in Europe’s second large economy slipped from 0.5% to 0.3% in the first three months of 2017.
Sterling rose by around half a cent against the US Dollar (USD) on Thursday as markets criticised Trump’s proposed tax reforms, with investors questioning the effect that cutting corporate tax from 35% to 15% would have on US growth.
The ‘Greenback’ was also weakened by the latest US Durable Goods Orders data as orders plummeted from 2.3% to 0.7% in March, performing even worst than the drop to 1.2% that had been predicted by analysts.
The US Dollar is likely to slip even further this afternoon as a preliminary reading of US GDP is expected to show that domestic growth tumbled from 2.1% to 1.1% in the first quarter.
The Pound Canadian Dollar (GBP CAD) exchange rate continued strengthening this morning as the oil-correlated ‘Loonie’ was weakened by falling crude prices, with reports that two key oilfields has restarted production, causing further concerns over global surplus levels.
After reaching a new six-month high against the Australian Dollar (AUD) yesterday afternoon, Sterling slipped overnight on Thursday as the UK’s latest consumer confidence figure fell from -6 to -7 in April, as British households faced growing inflationary pressure.
New Zealand Dollar
The Pound rocketed to a new eight-month high against the New Zealand Dollar (NZD) this morning as suggestions that Trump may place tariffs on dairy imports placed considerable pressure on the ‘Kiwi’.
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.
Last update: 22 Feb, 2020
The strong start to the year for “risk-on” currencies is already a distant memory.
Posted: 3 Feb, 2020
The threat of a proxy war between the US and Iran in Iraq has pared back some of the recent gains of “risk-on” currencies.
Last update: 8 Jan, 2020