FX Outlook: GBP Stronger Before Referendum, USD Supported by Rate Bets

Published: 15 Sep at 1 PM Tags: Euro, Dollar, Pound Sterling, America, UK, Eurozone, Australian Dollar, New Zealand Dollar, Canadian Dollar, Australia, New Zealand, USA, Canada, China, Germany, South Africa,

Pound Sterling GBP
On Monday the Pound was able to strengthen against some of its most traded peers as the several Scottish independence polls indicated that Scotland will remain part of the UK following this week’s referendum. Sterling was also boosted by the news that house prices rose again in September. As the threat of an overheating UK housing market could see the Bank of England bring forward its timeline for raising interest rates, the news that house prices climbed by 0.9% on a month-on-month basis was Pound supportive. Sterling volatility can be expected to follow the publication of the UK’s consumer price index tomorrow.

US Dollar USD
With investors betting that the recent stream of positive US reports will cause the Federal Reserve to increase borrowing costs sooner than currently projected, the US Dollar is enjoying bullish relationships with the majority of its currency counterparts. If today’s US industrial/manufacturing production figures come in above forecast levels the ‘Greenback’ could extend gains against rivals like the Pound and the Euro.

Euro EUR
As another week of trading began the Euro eased lower against the Pound and US Dollar. The common currency came under pressure as European Central Bank President Mario Draghi told the heads of Eurozone nations that they need to prepare for the latest batch of stimulus measures. The Euro was little-affected by the Eurozone’s trade balance figures for July. On a seasonally-adjusted basis, the Eurozone’s trade surplus narrowed from 13.8 to 12.2 billion Euros. Tomorrow’s ZEW economic sentiment surveys for Germany and the Eurozone are likely to have a more profound impact on the Euro’s exchange rate.

Australian Dollar AUD
Less-than-impressive industrial production and retail sales reports for China pushed the commodity-driven Australian Dollar lower against several of its most traded rivals during the South Pacific session. The ‘Aussie’ was also adversely affected by a steep decline in the level of Australia’s New Motor Vehicle Sales in August.

New Zealand Dollar NZD
Ahead of the publication of New Zealand’s second quarter growth data, the New Zealand Dollar was struggling to hold its ground. The South Pacific currency has been easing lower since the Reserve Bank of New Zealand issued its pessimistic policy statement last week and has recorded additional losses as a result of commodity pressures and poor Chinese data. The ‘Kiwi’ continued trending lower against the Pound and US Dollar as New Zealand’s Performance of Services index was shown to have dropped from 58.4 to 57.9 in August.

Canadian Dollar CAD
The ‘Loonie’, like other commodity-driven currencies, was feeling the heat after China published disappointing industrial production and retail sales reports. The Canadian Dollar could advance this afternoon if domestic existing home sales figures impress. However, Federal Reserve rate hike speculation is likely to limit any gains in the CAD/USD pairing.

South African Rand ZAR
Last week’s concerning South African reports left the Rand trailing its peers and the South Pacific currency is still trending in a weakened position. Over the next few days the South African reports to be aware of include the nation’s inflation and retail sales figures. Of course, the South African Reserve Bank’s interest rate decision will also be influential.
As of Monday, 15th September 2014, the Pound Sterling currency rates mentioned within this news item were as follows:

GBP EUR exchange rate was 1.2544, GBP USD exchange rate was 1.623, GBP AUD exchange rate was 1.7971, GBP NZD exchange rate was 1.9846, GBP CAD exchange rate was 1.7937, GBP CNY exchange rate was 9.9683, and GBP ZAR exchange rate was 17.8045.

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