Pound Sterling to Euro (GBP/EUR), US Dollar (GBP/USD) and Australian Dollar (GBP/AUD) Exchange Rates Stronger on Brexit News
The Pound surged vs. the Euro (GBP/EUR), US Dollar (GBP/USD) and Australian Dollar (GBP/AUD) during Monday’s European session thanks to an unexpected breakthrough in Brexit negotiations.
Markets reacted positively to the publication of a new, joint EU-UK draft treaty which detailed agreement between the two sides in a number of areas, including citizens’ rights and the financial settlement.
This naturally boosted hopes that talks are progressing, reducing the risk of the UK suffering an unceremonious crash out of the EU in March 2019.
Although disagreements remain, this news was enough to boost Pound Sterling (GBP) exchange rates across the board.
Even so, a disappointing showing from the UK consumer price index data could see GBP exchange rates return to a softer footing.
ECB Comments Support Euro (EUR) Exchange Rates
While the Eurozone trade surplus narrowed by more than forecast in January, this failed to keep Euro (EUR) exchange rates on an entirely weaker footing.
Demand for the single currency was supported by the latest commentary from European Central Bank (ECB) policymakers.
As two members of the ECB Governing Council took a more optimistic tone on the subject of the inflation outlook, the Euro found some cause for confidence.
With forecasts pointing towards a dip in the influential ZEW economic sentiment surveys, however, the mood towards the Euro is likely to deteriorate once again.
Trump Concerns Leave US Dollar (USD) Exchange Rates Pressured
Uncertainty over the outlook of the Trump administration continued to weigh on the appeal of US Dollar (USD) exchange rates.
The threat of a trade war with China remains a drag on USD exchange rates due to the negative impact that such a policy could have on the US economy.
As long as the US continues to shift towards a more protectionist stance on trade, and a sense of political risk remains, the upside potential of USD exchange rates is likely to remain limited.
As anticipation builds for the latest Federal Reserve interest rate decision the mood towards the US Dollar seems unlikely to particularly improve.
Canadian Dollar (CAD) Exchange Rates Sturdy despite Falling Oil Prices
Despite fluctuations in the price of Canada’s key commodity, Canadian Dollar (CAD) exchange rates were able to benefit from the relative weakness of the US Dollar on Monday.
As January’s Canadian wholesale trade sales figure is expected to show a solid rebound on the month, this should offer CAD exchange rates some degree of support.
Sliding Commodity Prices Leave Australian Dollar (AUD) Exchange Rates Weaker
Fresh sell-offs in iron ore and copper prompted Australian Dollar (AUD) exchange rates to shed ground at the start of the week, with markets demonstrating renewed jitters over the prospect of a global trade war.
The lingering threat of the US administration levelling additional tariffs on China left investors in a distinctly risk-averse mood.
There consequently appeared little reason to favour the commodity-correlated ‘Aussie’ on Monday, given the antipodean currency’s vulnerability to any significant deterioration in the global economy.
Unless the Reserve Bank of Australia’s (RBA) March meeting minutes prove unexpectedly hawkish in nature, AUD exchange rates are likely to remain under some degree of pressure today.
New Zealand Dollar (NZD) Exchange Rates Struggling before RBNZ Decision
A slight loss of momentum from the latest New Zealand services PMI left New Zealand Dollar (NZD) exchange rates lacking any particular rallying point on Monday.
With the Reserve Bank of New Zealand (RBNZ) still widely expected to leave interest rates on hold this week, demand for the ‘Kiwi’ remains limited.
As risk appetite is still heightened by fears of a US-instigated trade war, the New Zealand Dollar has seen little in the way of support.