Pound Sterling Rallies on Low Data Day, US Dollar Trends Narrowly ahead of Key Fed Speech

Published: 12 Sep at 5 PM Tags: Euro, Dollar, Pound Sterling, America, UK, Eurozone, Australian Dollar, New Zealand Dollar, Canadian Dollar, Australia, New Zealand, USA, Canada, Greece,

Pound Sterling
Despite a slow start to the day demand for the Pound picked up over the course of Monday’s European session. The British Chambers of Commerce lowered its growth forecasts amidst fresh warnings over the potential detrimental impact that the Brexit vote will have on the UK economy. Even so, this was not enough to dampen the mood towards Sterling for long at the start of the week, with the Pound benefitting from the weakness of many of its rivals.

Euro
Worries have been mounting once again over the future of the Greek bailout deal, with Eurozone finance ministers having expressed concern over a lack of progress on mandated reforms. With this threatening to throw fresh doubt over the outlook of the currency union there was little reason for investors to stick with the Euro on Monday. Speculation over the possibility of the Federal Reserve raising interest rates in the near future also put downside pressure on the single currency.

US Dollar
Confidence in the ‘Greenback’ has been shored up by the raised odds of the Fed making an interest rate hike before the end of the year, despite the mixed nature of recent domestic data. Investors are awaiting further guidance from Fed policymaker and prominent dove Lael Brainard, whose tone could offer a clue as to the outcome of next week’s policy meeting. If Brainard expresses a more hawkish outlook on monetary policy this could see the US Dollar strengthening substantially.

Australian Dollar
Commodity prices came under fresh pressure today, with both copper and iron ore falling to their lowest levels since the end of June. This weighed heavily on the ‘Aussie’, particularly with markets placing greater bets on the Fed hiking interest rates imminently. Confidence was also dented by a softening in domestic credit card purchases, which seemed to point towards a weakening in consumer confidence and a less robust economic outlook.

New Zealand Dollar
The higher-yielding nature of the ‘Kiwi’ has seen it remain on a stronger footing against many of the majors on Monday, despite risk appetite weakening. Although the market pricing for an imminent Reserve Bank of New Zealand (RBNZ) interest rate cut remains high investors are still uninclined to sell out of the antipodean currency. If tonight’s food price inflation measure proves discouraging, though, the New Zealand Dollar may struggle to maintain its bullishness.

Canadian Dollar
With risk appetite generally diminished the ‘Loonie’ has been weighed down by concerns in the oil market. As the latest US rig count jumped and OPEC raised its forecast for non-member output in 2017 the signs continued to point towards a persistent global oversupply glut. Given the weakness of recent Canadian data this has left the ‘Loonie’ on a downtrend across the board, with its appeal unlikely to recover in the near future.

As of Monday, 12th September 2016, the Pound Sterling currency rates mentioned within this news item were as follows:

GBP EUR exchange rate was 1.1866, GBP USD exchange rate was 1.3335, GBP AUD exchange rate was 1.7638, GBP NZD exchange rate was 1.813, and GBP CAD exchange rate was 1.739.

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