The Pound (GBP) remained robust on Monday, actually making gains against a number of its peers despite the International Monetary Fund (IMF) cutting its UK growth forecast from 2% to 1.7% for the year.
The Fund based its estimate on the ‘tepid performance’ of the UK economy so far this year and suggests that the uncertainty of Brexit will continue to hamper growth over the coming months.
The UK will release its preliminary reading for second quarter GDP tomorrow, which may support the IMF’s forecasts, with growth expected to have only risen from 0.2% to 0.3% in the three months to June.
The Pound Euro (GBP EUR) exchange rate was able to push around half a cent higher at the start of this week’s session as poor Eurozone Data helped to offset the pessimistic outlook from the IMF.
A flash reading for the Eurozone’s Manufacturing PMI released by IHS Markit yesterday suggested that activity in the sector had slowed in July as the index dropped from 57.4 to 56.8.
The single currency was able to claw back some ground early this morning however with the release of Germany’s latest Ifo Business Climate Index, which rose in July and suggested that German businesses are increasingly confident in the economic outlook.
Sterling was able to push higher against the US Dollar (USD) yesterday as the ‘Greenback’ continued to be undermined by political worries over the Trump administration.
The US Dollar was also weakened by the release of the latest US Existing Home Sales, which fell further than expected in June.
However, investors this week will be mainly focused on the latest Federal Reserve Rate Decision on Wednesday and while the central bank is not expected to vote for an interest rate hike in this week’s meeting, analysts hope that the FOMC will drop some clues on how the Fed plans to move in future monetary policy.
The Pound Canadian Dollar (GBP CAD) exchange rate found its early gains swiftly reversed yesterday as the ‘Loonie’ was able to mount a recovery after Saudi Arabia announced further cuts to its global oil exports, helping to bolster flagging crude prices and consequently the Canadian Dollar.
After briefly dipping against the Australian Dollar (AUD) on Monday, Sterling is showing some more resilience this morning as the ‘Aussie’ struggles to advance ahead of key developments like the Fed’s latest monetary policy meeting.
New Zealand Dollar
The Pound New Zealand Dollar (GBP NZD) exchange rate climbed over a cent on Monday as investors appeared to shake off concerns over the IMF’s latest UK growth forecasts.
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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