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Pound Slips as Data Disappoints

#News #AUD #CAD #EUR #GBP #NZD #USD
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Sterling


GBP/USD 1 Week Chart

The Pound (GBP) fell against the majority of its peers last week following a string of poor domestic data that culminated with the Services PMI on Friday, which tumbled from 54.5 to 53.3 in February.

This downturn continued at the start of trading this morning as the run up to the official start of Brexit sees Sterling sentiment rapidly corrode. Theresa May remains confident that the House of Lord’s amendment of the government’s Brexit bill will not delay her plans to trigger Article 50 later this month.

Bank of England (BoE) Deputy Governor Charlotte Hogg will speak later today, possibly reversing some of the Pound’s misfortune if she suggests a more hawkish approach to monetary policy in the future.

Euro

The Pound Euro (EUR) exchange rate fell by over two cents last week as GBP’s run of strength appeared to finally come to an end.

The single currency was also strengthened on Friday by the release of domestic services data, with activity in the Eurozone’s private sector rising from 53.7 to 56.0 last month.

However EUR may meet some psychological resistance over the next couple of weeks as we approach the Dutch elections, with markets fearing that a positive turnout for far-right candidate Geert Wilder could strengthen populism on the continent.

US Dollar

Sterling plummeted to a new six-week low against the US Dollar (USD) last week as markets bet that the Federal Reserve will raise interest rates in March.

The odds of a fed rate hike this month exploded last week, jumping from 30% to over 80% as a number of Fed policymakers made hawkish remarks suggesting that rates would rise sooner than expected.

The ‘Greenback’ could slip this afternoon however as analysts predict that US Factory Orders dropped from 1.3% to 1.0% at the start of the year.

Canadian Dollar

Despite falling on Friday, the Pound Canadian Dollar (CAD) exchange rate ended the week around a cent higher as oil prices slumped.

The ‘Loonie’ also struggled following the Bank of Canada’s (BOC) latest rate meeting. While analysts had widely predicted that the Bank would vote to leave interest rates unchanged, Governor Stephen Poloz’s downbeat outlook caused markets to shy away from CAD.

Australian Dollar

The Pound found a stronger footing against the Australian Dollar (AUD) at the end of last week, recovering from a three-month low as commodity markets were hit by a wave of risk aversion.

The ‘Aussie’ also suffered as the latest Australian Trade Balance fell dramatically short of expectations, with the trade surplus plummeting from an all-time high of $3.33bn to $1.30bn at the start of the year.

New Zealand Dollar

The GBP NZD exchange rate also took some ground last week as the New Zealand Dollar was softened by a decline in risk appetite, with traders flocking back to the US Dollar following the jump in rate hike bets.

 

Further Reading

 

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Coronavirus unnerves currency markets

The strong start to the year for “risk-on” currencies is already a distant memory.

Posted: 3 Feb, 2020

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Last update: 8 Jan, 2020

  

Posted to: News

 
 
Please note that the opinions of our authors are their own and do not reflect the opinion of Best Exchange Rates and should not be taken as a reference to buy or sell any financial product.
 

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