Pound Sterling Daily Update: Wounded GBP Limps towards Year End

Pound Sterling (GBP) Exchange Rates Mixed despite Lack of Data

The Pound (GBP) was on mixed form yesterday as markets reopened after the Christmas break.

Despite any economic data being released, Sterling managed to rise slightly against the majority of currencies, with one notable exception.

The Pound to Euro exchange rate was the only major currency pairing to fall, following the release of a broadly upbeat report from the European Central Bank on the outlook for the Eurozone economy in 2019.

Today the Pound is looking steadier, although it is again drifting lower against the Euro in early trade.

Pound Euro (GBP/EUR) Exchange Rate Sinks Following Eurozone Forecast

Euro (EUR) exchange rates found support from the European Central Bank’s (ECB) latest Economic Bulletin, which pointed towards mounting inflationary pressure in 2019.

This assessment gave investors fresh incentive to favour the single currency, even as the report indicated global growth was likely to slow further in the coming year.

While the ECB remains unlikely to raise interest rates in the near future given the disappointing run of recent domestic data, the bulletin still failed to quash hopes of a 2019 interest rate hike.

Pound US Dollar (GBP/USD) Traders Unnerved by Wild Stock Market Swings and Fed Chair Speculation

It was another wild ride for US stock markets yesterday, following Wednesday’s historic 1086 point jump in the Dow Jones Industrial Average, which also caused fluctuations in currency markets.

The GBP/USD exchange rate rose yesterday, aided by speculation over the security of Fed Chair Jerome Powell’s position.

Rumours that Powell could be in the firing line for his decision to raise interest rates at the Federal Reserve’s December policy meeting continued to weigh on USD exchange rates.

A worse-than-anticipated US jobs claims report added to the downside pressure on USD, with some shaky consumer confidence stats adding to the Dollar’s malaise.

Pound Australian Dollar (GBP/AUD) Exchange Rate Boosted by Global Trade Uncertainty

The Australian Dollar briefly surged in reaction to Wednesday night’s epic US stock market rally, but towards the end of yesterday’s session GBP/AUD was climbing again as US stock markets began to fall back.

Traders dumped the Australian Dollar due to lingering concerns about global growth, continuing US-China trade tensions and highly volatile stock markets, causing a risk-off movement to ripple through currency trades.

Australian private sector data from November will be published later today although it is unlikely to be highly influential. Instead, the Australian Dollar is most likely to be influenced by shifts in market risk-sentiment and financial market volatility.

Jason Heppenstall

Jason Heppenstall is a journalist and editor at TorFX.

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