The Pound has defied the odds today and appreciated against the Euro, the US Dollar and a number of other currency peers.
Pound Sterling: GBP Advances after Brexit Secretary Resigns
This favourable trading follows the news that former Brexit Secretary David Davis has resigned after an unresolved dispute about the how the UK should leave the EU.
Although his departure caused initial Pound Sterling turbulence, GBP has since recovered after Mr Davis stated that he wouldn’t be challenging Theresa May’s leadership.
Additionally, his departure has led some economists to forecast that there could be a less economically-turbulent ‘hard Brexit’ on the cards.
The Pound’s current strength could be consolidated if tomorrow’s UK output data shows an as-expected improvement for May’s readings.
Euro: EUR Resilient despite Cautious ECB Statement
Proving how a weaker US Dollar has raised demand for non-USD currencies, the Euro has appreciated against USD and other peers today despite cautious European Central Bank (ECB) remarks.
ECB President Mario Draghi has reiterated that there will be no interest rate hikes from the central bank for at least a year, adding that there are material risks from an escalating EU-US trade war.
The Euro looks set to see some losses on Tuesday, when ZEW economic sentiment data will be released.
This is tipped to show falling levels of economic optimism in Germany during July, which could end up devaluing the Euro.
US Dollar: USD Dragged Down by Stronger Pound Sterling
In an uncommon turn of events, the US Dollar’s losses today are partly down to a stronger Pound.
With GBP rallying after the morning’s Brexit-related news, Sterling is considered a more desirable currency to traders then the US Dollar.
On the home front, the US Dollar has also been weakened by Friday’s jobs market data, which showed a surprise rise in the unemployment rate during June.
This afternoon will bring a speech from Federal Reserve official Neel Kashkari.
Mr Kashkari isn’t voting on US interest rates this year, but could still restore USD trader confidence if he backs near-term interest rate hikes.
Australian Dollar: Devalued US Dollar Enables AUD Exchange Rate Rise
The Australian Dollar has been in demand today, advancing against the Pound, Euro, US Dollar and all of its other regular peers.
This strong performance is down to the latest devaluing of the US Dollar, which has raised risk sentiment among traders and boosted the Australian Dollar.
The AUD could be on track for greater gains tomorrow when NAB business confidence data is released.
June’s reading is predicted to show growth from 6 points to 8, which might be enough to extend the Australian Dollar’s current advance.
New Zealand Dollar: NZD Trading Mixed after Government Spending Warning
Today has seen mixed New Zealand Dollar movement, with NZD rising against the US Dollar and Canadian Dollar but declining against the Pound and Euro.
This varied movement is down to concerns about how the economy could be damaged by what is perceived as reckless spending, along with wider trading issues.
Opposition MPs have attacked the government for not keeping funds in reserve, while there are still lingering worries that a global trade war could damage the New Zealand economy.
This week’s only notable NZ news will be a manufacturing PMI reading out late on Thursday; this might boost New Zealand Dollar demand if it shows rising activity as forecast.
Canadian Dollar: CAD Devalued by Rate Hike Tensions
On the week of a major Canadian interest rate decision, the Canadian Dollar has fallen against the Pound, Euro and Australian Dollar; a minor rise has been seen against the US Dollar.
This generally poor performance has been caused by trader uncertainty about this week’s Bank of Canada (BoC) interest rate decision, due on Wednesday.
BoC policymakers are widely expected to hike interest rates from 1.25% to 1.5%, but there are still background concerns that with the risk of a worsening trade war the BOC may hold fire for another month.
If the BOC does raise interest rates on Wednesday then the Canadian Dollar could erase today’s losses and rise sharply against the Pound.
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.
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Last update: 7 Jan, 2020