Pound Sterling (GBP) Exchange Rates Gain on Last Trading Day of 2018

Pound Sterling (GBP) Exchange Rates Buck Up as Mortgage Approvals Surprise

The Pound (GBP) was able to gain on a number of its rivals at the end of last week as some better-than-expected mortgage approval figures lent support to the UK currency amidst a dearth of more significant data.

Weakness in rivals including the Euro and the US Dollar allowed Sterling to drift higher, as did the fact that Parliament is on recess, meaning a lack of fresh Brexit headlines for markets to focus on.

This week’s manufacturing, construction and services PMI statistics will give an insight into how the UK economy fared in December, with current indications being that the figures will be broadly positive.

Pound Euro (GBP/EUR) Exchange Rate Benefits from Shaky European Data

The Euro came under pressure as some disappointing data from Spain and Germany was released on Friday.

Following on from Wednesday’s bulletin from the European Central Bank, which painted a generally upbeat picture of the economic outlook, Spanish GDP seemed to contradict the findings as it printed at 2.4% for Q3, against an expectation of 2.5%.

Inflation data coming out of Germany on Friday proved to be even more disappointing, with December’s CPI dipping to just 0.1% month-on-month, despite expectations of a 0.3% rise.

After this insipid set of results, the Pound was able to eke out gains against the Euro.

Pound US Dollar (GBP/USD) Rises as Risk Sentiment Improves and Stocks Rebound

A global stock market rebound had the effect of limiting the safe-haven appeal of the US Dollar (USD) towards the end of last week, sending the currency lower.

Although concerns over the global economic outlook remain, a fresh lull in selling left USD exchange rates on a downtrend, to the benefit of GBP.

December’s surprisingly low US consumer confidence index, which dipped from 136.4 to 128.1, added further downside pressure to USD.

This was superseded later, however, by the Chicago Purchasing Manager’s Index for December, which revealed a bullish score of 65.4 – far in excess of the anticipated 62.0.

Dallas Fed manufacturing data will be published today, although US Dollar investors are likely to remain focused on US political developments regarding the partial government shutdown.

Pound Australian Dollar (GBP/AUD) Exchange Rate Rises as Growth Concerns Persist

The Pound to Australian Dollar exchange rate was able to sustain its gains last week as concerns about slowing global growth and the US government partial shutdown, made investors hesitant to take risks.

The effect of this was to make the risk-correlated Australian Dollar unappealing compared to rivals such as Sterling.

The biggest influence on the Australian Dollar last week, however, was a run of weak Chinese data indicating a slowing economy. With China being Australia’s biggest trade partner, the ‘Aussie’ took a bit of a battering following the release.

This week AUD investors are likely to remain focused on global growth jitters and Chinese data, although today’s Australian private sector credit data may also provide some guidance.

Pound New Zealand Dollar (GBP/NZD) Exchange Rate Rudderless in Quiet Data Period

In a week when no New Zealand data was released, the NZ Dollar was left at the mercy of risk sentiment and data released by its major trading partners, China and Australia.

By Friday afternoon the Pound was up by around 0.4% against the ‘Kiwi’, as weakening Chinese data and the US government debt impasse caused a flight to safety.

This week also sees a dearth of data relating to the New Zealand economy, so expectations remain that the GBP/NZD pairing will be driven by political news and economic sentiment heading into the New Year.

Jason Heppenstall

Jason Heppenstall is a journalist and editor at TorFX.

Contact Jason Heppenstall