With market conditions muted due to the May Day Bank Holiday, there was not a lot of significant movement between the major currency peers yesterday.
GBP/EUR
The Pound to Euro exchange rate (GBP/EUR) traded within a tight half-cent range, closing for the day at around 1.2160. Data out of the Eurozone showed that Producer Prices fell by -0.2% on a monthly basis and -1.6% compared to this time last year. Eurostat, who compiled the report, said that falling energy prices were the main river behind the low score.
Although the soft data did not support the single currency, the Euro did not suffer any significant losses because the majority of traders expect the European Central Bank to remain on the sidelines during May. The ECB meets on Thursday to discuss monetary policy but, due to the small rise in Eurozone CPI inflation from 0.5% to 0.7% last week, the Bank is most likely to stick to verbal intervention rather than actually loosening monetary policy.
GBP/USD
The Sterling to US Dollar exchange rate (GBP/USD) declined mildly from 1.6880 to 1.6865 as US tertiary economic output printed positively at 55.2, compared to expectations of 54.1. The upbeat report showed that the American Services sector saw a considerable jump in new orders during April as the effects of the polar vortex wore off.
The Composite US Purchasing Managers Index, which measures private sector output across the whole economy, rose from 54.9 to 55.6 in a sign that the United States is likely to post a sizeable rebound in the second quarter. US first quarter growth printed at a dismal 0.1%.
GBP/AUD
The Pound to Australian Dollar exchange rate (GBP/AUD) rallied by around half a cent to 1.8240 during the early hours of Monday morning as markets reacted to another soft Chinese Manufacturing output score. The HSBC PMI came in at 48.1 compared to predictions of 48.4, which dampened demand for the ‘Aussie’. China is Australia’s largest trading partner and any slowdown in Chinese economic output has the potential to have a negative affect on Chinese demand for Australian exports.
GBP/NZD
The Sterling to New Zealand Dollar exchange rate (GBP/NZD) declined by around half a cent to 1.9440 yesterday as investors geared up for this evening’s New Zealand Unemployment Rate report. Markets anticipate that the jobless rate fell from 6.0% to 5.9% during the first quarter, which, if accurate, could persuade the Reserve Bank of New Zealand to continue with its hiking cycle over the next few months.
Currency Updated at 16:45 on 07/05/2014
GBP/USD
With yesterday’s impressive UK services report keeping the Pound supported, the British currency was trading at an almost five-year high against the US Dollar and at a nine-week high against the Euro. Tomorrow’s Bank of England rate decision will decide what direction Sterling takes for the rest of the week. While a hawkish stance would drive the Pound higher, if the BoE reiterates its commitment to keeping interest rates at record lows for the foreseeable future we could see a reversal in the currency’s upward trajectory.
EUR/USD
The Euro was trading close to a seven-week high against the US Dollar ahead of tomorrow’s European Central Bank rate announcement. If the central bank refrains from introducing additional stimulus, as anticipated by economists, the Euro will be boosted. However, a surprise move from the central bank or any derogatory comments regarding the strength of the local currency could drive the Euro lower against its rivals. US initial jobless claims figures could also have an impact on the EUR/USD pairing.
AUD/USD
During the European session the ‘Aussie’ largely retained declines against several of its most traded currency counterparts. While the US Dollar came under pressure before Federal Reserve Chairwoman Janet Yellen testified before congress, the less-than-impressive Australian retail sales and construction output data kept the Australian Dollar trading lower. Overnight, additional AUD fluctuations are most likely to occur as a result of Australia’s employment figures. A smaller-than-forecast jobs gain may push the AUD/USD pairing lower.
US Dollar
This week’s most influential US development, Fed Chairwoman Janet Yellen’s economic testimony, kept the ‘Greenback’ on the back foot for much of Wednesday. As economists expected Yellen’s comments to be dovish in tone the US Dollar fell to a three-week low against the Yen and drifted lower against the Pound.
Pound (GBP) Exchange Rates
[table width=”100%” colwidth=”50|50|50|50|50″ colalign=”left|left|left|left|left”]
Currency, ,Currency,Rate ,
Pound Sterling,
,US Dollar,1.6962,
Pound Sterling,,Euro,1.2185,
Pound Sterling,,Australian Dollar,1.8173,
Pound Sterling,,New Zealand Dollar,1.9554,
US Dollar,,Pound Sterling,0.5895,
Euro,,Pound Sterling,0.8207,
Australian Dollar,,Pound Sterling,0.5504,
New Zealand Dollar,,Pound Sterling,0.5111,
[/table]
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