Sterling (GBP) Recovers Despite Poor Services Results

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Pound Sterling (GBP)

GBP/USD 1 Week Chart

The Pound advanced against many majors yesterday despite the day’s poor UK services report.

UK services data fell short of forecasts, coming in at 53.2 and missing the predicted slip from 53.8 to 53.5. This worsened market concerns that Britain’s economic activity was slowing due to Brexit uncertainties and worsening consumer confidence.

Markets have been hesitant to sell the already undervalued Pound, with some opting to buy the currency from its lows due to weakness in rivals.

US Dollar (USD)

The Pound to US Dollar exchange rate jumped yesterday as markets were disappointed by the day’s US ecostats.

US factory orders contracted by -3.3% in July and August’s ISM New York index slowed from 62.8 to 56.6. On top of this, the final July durable goods orders figure came in with a concerning contraction of -6.8%.

This worsened concerns about the US economic outlook and hit Fed rate hike bets too. Market bets that the Fed will leave rates frozen until 2018 are now around 62%.

Euro (EUR)

The Pound to Euro exchange rate advanced on Tuesday as investors bought Sterling up from its lows.

Investors hesitated to buy the strong Euro amid uncertainties about the September European Central Bank (ECB) policy decision, which will be held tomorrow.

There is speculation that the bank will not appear too concerned about the Euro’s recent strength, but if the bank takes a more dovish or cautious tone than expected the shared currency will drop.

Tuesday’s Eurozone PMIs were relatively underwhelming and today’s German factory orders results were disappointing too, which helped GBP/EUR to advance.

Australian Dollar (AUD)

The Pound to Australian Dollar exchange rate briefly dipped yesterday due to defiant ‘Aussie’ strength, but today the pair trended near its best levels all week.

Investors were largely unfazed by Australia’s Q2 Gross Domestic Product (GDP) results, which simply met expectations. The quarterly growth rate came in at 0.8% and the yearly rate at 1.8%. While this was a generally impressive result, it was already largely priced in to ‘Aussie’ trade.

New Zealand Dollar (NZD)

The Pound to New Zealand Dollar exchange rate tumbled yesterday. Investors bought the ‘Kiwi’ up from its weekend lows and it was supported further by the day’s Global Dairy Trade (GDT) auction.

Prices of dairy, New Zealand’s most lucrative commodity, rose by just 0.3%. However, as this was the biggest rise in prices for the commodity since June, it encouraged NZD traders.

GBP/NZD edged higher today however, as risk-aversion made investors hesitate on buying the ‘Kiwi’.

Canadian Dollar (CAD)

The Pound to Canadian Dollar exchange rate advanced yesterday, as risk-aversion kept the Canadian Dollar under pressure while investors bought the Pound from its lows.

Prices of oil, Canada’s most lucrative commodity, have seen mixed performance since Hurricane Harvey, and now speculation is rising that Hurricane Irma could hit oil prices too.

Canadian Dollar investors will largely be reacting to the Bank of Canada’s (BOC) September policy decision today however.

Disclaimer: This update is provided by TorFX, a leading foreign exchange broker, its content is authorised for reuse by affiliates.


Further Reading


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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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