British Pound Edges Higher on UK Growth, Euro Declines ahead of Troika Meeting and US Dollar Softens on Delayed Fed Rate Hike Bets

Published: 28 Jul at 3 PM Tags: Euro, Dollar, Pound Sterling, America, UK, Eurozone, Australian Dollar, New Zealand Dollar, Canadian Dollar, Australia, New Zealand, USA, Canada, China, Greece,

Pound Sterling (GBP)
The British Pound advanced versus most of its currency rivals during Tuesday’s European session after growth data met with estimates. Second-quarter Gross Domestic Product equalled economists’ forecast of 0.7% growth on the quarter and 2.6% growth on the year. The appreciation has been somewhat sluggish, however, as the headline figure masked shrinking manufacturing output. The UK’s reliance upon the services sector is a concern for many analysts and shows the British government is a long way off the ‘march of the makers’.

Euro (EUR)
As officials from Greece’s creditors convene in Athens to discuss the third bailout package, the shared currency declined. The depreciation was initiated by fears that Monday’s surge was overdone with a long way still to go until negotiations between the Hellenic nation and its lenders have concluded. Additional losses can be attributed to the revelation of ex Greek Finance Minister Yanis Varoufakis’ contingency plan in the event of a forced Grexit.

US Dollar (USD)
As traders await the result from US Consumer Confidence data, the ‘Greenback’ (USD) softened versus the majority of its currency rivals. The downtrend can be attributed to mounting speculation that the Federal Reserve will delay a benchmark rate hike in the current climate. Falling commodity prices have eased inflationary pressures and the uncertainty surrounding China’s equity markets is also likely to have an adverse effect on Fed rate decisions.

Canadian Dollar (CAD)
The prospect of a Fed rate hike delay has seen heightened demand for the ‘Loonie’ (CAD). The longer the Federal Reserve holds the cash rate, the better for the Canadian Dollar. Critically low oil prices, with Brent crude entering a bear market, are likely to weigh on ‘Loonie’ gains, however.

Australian Dollar (AUD)
Despite concerns regarding China’s stock market, the Australian Dollar advanced versus many of its currency competitors during Tuesday’s European session. The appreciation can be linked to news that Beijing intends to intervene in the stock market which has allayed fears of the fallout for the Australian economy from the Chinese slowdown. Improving consumer confidence and rising iron ore prices also aided the ‘Aussie’ (AUD) uptrend.

New Zealand Dollar (NZD)
Similarly to its South Pacific neighbour, the ‘Kiwi’ (NZD) appreciated in response to Beijing’s promise of intervention in the stock market. The New Zealand Dollar is holding gains against its Oceanic counterpart thanks to speculation that the Reserve Bank of New Zealand (RBNZ) will keep their cash rate higher than the Reserve bank of Australia (RBA).
As of Tuesday, 28th July 2015, the Pound Sterling currency rates mentioned within this news item were as follows:

GBP EUR exchange rate was 1.4114, GBP USD exchange rate was 1.5614, GBP AUD exchange rate was 2.1266, GBP NZD exchange rate was 2.3244, GBP CAD exchange rate was 2.0187, and GBP CNY exchange rate was 9.6955.

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