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FX Rates Mixed as BoE Warns about Risks in Brexit Withdrawal Process

#News #AUD #CAD #EUR #GBP #NZD #USD
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Bank of England Cites Perceived Threats of Brexit Withdrawal Process – Pound (GBP) Exchange Rates Encumbered

Sterling was trading on a poor footing against the majors on Wednesday morning, falling as investors responded to the Bank of England’s (BoE) latest financial stability report.

According to the bank, progress has been made to prepare the UK’s financial sector for Brexit, but significant ‘material risks’ remain.

The bank noted that the EU had not put in place temporary permissions to allow UK entities to service contracts with customers in the European Economic Area (EEA), and that this could result in severe difficulties for firms restructuring their businesses or transferring existing contacts.

This outlook weighed down the Pound, with investors still bearish ahead of the looming EU Council meeting.

GBP/EUR Exchange Rate Stagnant – Investors Fear Merkel Coalition Collapse

The Pound Euro (GBP/EUR) exchange rate as trading within a narrow band on Wednesday, with the Euro now limited in light of concerns that German Chancellor Angela Merkel’s coalition government could collapse next week.

Investors will be keeping a close eye on the two-day EU summit in Brussels for a better indication of whether agreement on asylum laws will be reached or not – with Mrs Merkel looking to push through a deal with other EU countries that will make them hold onto migrants and asylum seekers who register within their country.

Whether she will be successfully remains to be seen, but the uncertainty has continued to weigh on the single currency in the meantime.

US Dollar (USD) Exchange Rates up despite Below-Forecast US Consumer Confidence

The US Dollar (USD) continued to trade higher against the majors on Wednesday, shrugging off yesterday’s slightly weaker US consumer confidence print and riding a wave of general economic optimism.

Today, investors will be looking to assess the latest in US durable goods orders – a useful gauge of output  – with an improvement forecast from -1.6% to -0.9%.

If this occurs then we could see the ‘Greenback’ continue to trade higher against the majors.

GBP/CAD Exchange Rate Steady – Investors Await Stephen Poloz’s Speech in Victoria

The Pound Canadian Dollar (GBP/CAD) exchange rate remained stagnant on Wednesday morning, with investors slightly sheepish ahead of Bank of Canada Governor Stephen Poloz’s speech in Victoria.

Not too long ago investors were expecting a rate hike in July from the central bank, but as global risk factors grew, hawkish expectations have diminished.

Investors are now fearful that Poloz will point to the collapse of NAFTA negotiations and rising trade uncertainties as reasons to remain dovish in the coming months.

GBP/AUD Exchange Rate Bearish – AUD Weaker as USD Strengthens

The Pound Australian Dollar (GBP/AUD) exchange rate was also trading within a narrow band on Wednesday, with the ‘Aussie’ Dollar still encumbered by trade tensions.

Yesterday saw the Trump administration move to heighten measures to restrict Chinese investment in the American economy and potentially block the manufacturing of US high-tech products in China – a move that sent investors fleeing to safe-haven currencies.

With a lack of domestic data on the horizon, the primary mover for the Australian Dollar today will likely be US data and the ensuing performance of the ‘Greenback’.

GBP/NZD Exchange Rate Surges as NZ Business Confidence and Activity Fall

The Pound New Zealand Dollar (GBP/NZD) exchange rate climbed on Wednesday, supported by a sizable contraction in New Zealand’s business confidence scoring.

According to the ANZ group, business confidence fell from a score of -27.2 to -39.0 in June, whilst the activity outlook index decreased from a score of 13.6 to 9.4.

These poor results were largely due to global trade uncertainties and concerns for the state of the broader economy under the Labour government.

Looking ahead, investors will be paying close attention to the Reserve Bank of New Zealand (RBNZ) rate decision, due late tonight.

Currently, no rate hike is expected, and given the soft performance of recent data many economists are expecting the bank to remain dovish in its policy statement.

 

Further Reading

 

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Last update: 11 Dec, 2019

AUD/GBP Between a Rock and a Hard Place – USD Strength

AUD/GBP versus AUD/USD and GBP/USD

Both the Australian dollar and British pound sterling have had a hard time of late caught between the rock of the China/US trade war and the Brexit hard place.

Last update: 27 Aug, 2019

Australia Cuts Interest Rates to Record Low

RBA Australian dollar AUD currency news and forecasts

The RBA has cut Australian interest rates to a record low of 1 percent in an effort to boost inflation. The Australian dollar is slightly stronger following the widely expected decision but is expected to lose 5–7 percent of its value before year-end.

Last update: 14 Aug, 2019

  

Posted to: News

 
 
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