Pound Exchange Rates Tumble after EU Official's Warning

Pound Sterling Exchange Rates Tumble on EU Barnier’s Transitional Agreement Warning

The Pound slumped on Friday after EU chief Brexit negotiator Michel Barnier claimed that a post-Brexit transitional period was not a ‘done deal’. Barnier stated that it was dependent upon the UK agreeing to the EU’s demands during the negotiation phase; something that already seems unlikely given that the UK government has raised concerns with the EU’s draft text that summarises the agreements made during the first phase of negotiations which ended just before Christmas.

Empty Eurozone Data Calendar Fails to Slow Pace of GBP/EUR Exchange Rate Losses

A lack of Eurozone data on offer on Friday put the Euro firmly in reactionary mode, with EUR responding to strength or weakness in its major currency peers rather than pressing higher or falling lower of its own accord. With the Pound tumbling across the board, this meant that GBP/EUR exchange rates were losing around -0.9% as the end of the day’s trading approached.

Thursday Night Fed Dudley Comments Boost US Dollar, GBP/USD Exchange Rate Weakens

The GBP/USD exchange rate recorded losses on a similar scale as those seen by GBP/EUR on Friday. There was little fresh US economic data of note, but the US Dollar was pushed higher as markets reacted to Thursday evening’s comments from Federal Reserve official William Dudley. The New York Federal Reserve President and voting member of the Federal Open Market Committee (FOMC) claimed that he would support hiking interest rates in March if the US economy continued to perform strongly.

It’s a thin day for data as far as all the major economies are concerned, meaning the US monthly Budget Statement for January is one of the most impactful releases on the entire calendar, let alone in terms of US data.

Poor Canadian Labour Market Data Fails to Stem GBP/CAD Exchange Rate Losses

The Canadian Dollar was on miserable form heading into the weekend, although the Pound wasn’t to be outdone and so GBP/CAD still lost around -0.8% during the course of the afternoon. The January net change in employment figure significantly disappointed forecasts, showing a shock decline of -88,000 in the workforce, rather than the 10,000 uptick economists had been expecting. This pushed the unemployment rate up from 5.8% to 5.9%.

Markets Favour Risky Australian Dollar; GBP/AUD Exchange Rate Tumbles

The Australian Dollar was on strong form on Friday, with more stable currencies such as the Pound, Euro and US Dollar for one reason or another rendered unappealing. The huge decline in Sterling deterred investors, there was no fresh Eurozone data to warrant adjusting EUR positions and the US Dollar had already appreciated a lot on expectations of a March rate hike, so upside potential could be limited. Markets were also cheered by new poll of analysts by Reuters which found that predictions for Australian Dollar exchange rates in a year’s time have been revised slightly higher.

A speech from the Reserve Bank of Australia’s (RBA) Luci Ellis and the ANZ Roy Morgan weekly consumer confidence index account for a good chunk of the sparse releases from the major economies pencilled in for today.

GBP/NZD Exchange Rate Slides as Safe Haven Weakness Nudges Markets towards Commodity Currencies

Similar to the Australian Dollar, the New Zealand Dollar was benefiting from market aversion to the more stable currencies yesterday. GBP/NZD exchange rates slumped, even though there was no New Zealand data released to change the market outlook on the ‘Kiwi’.

Josh Ferry Woodard

After leaving university in 2011 Josh briefly worked as a currency analyst in the South West of Cornwall. Josh continued monitoring the currency markets and publishing exchange rate analysis after moving to London in 2012, with a particular focus on the impact of economic and political stimuli on forex. Josh was a regular contributor to The Telegraph’s weekly currency feature for several years.

Contact Josh Ferry Woodard