Exchange Rate News: Pound (GBP) Stable, US Dollar (USD) Sell-Off Persists on US-China Trade Hopes

Pound (GBP) Accelerates in Spite of Brexit Risk

The Pound (GBP) got off to solid start this week, ticking higher on Monday as markets shrugged off Brexit concerns, which have been a major source of weakness for GBP through the second half of December.

This upswing in Sterling was likely helped by the UK’s latest mortgage figures, as they revealed home loan approvals shot up to a two-year high in November.

Looking ahead, the Pound may struggle to find momentum today amid a lull in UK economic data and lack of Brexit headlines during parliament’s Christmas recess.

Euro (EUR) Buoyed by USD Weakness

The Euro (EUR) enjoyed some modest support yesterday as the single currency was bolstered by the ongoing slump in the US Dollar (USD).

This upswing in EUR occurred amid rising expectations that Germany could implement some fiscal stimulus measures in 2020.

The Euro may also maintain its upward momentum in the latter half of the week, with economists forecasting Germany will report that domestic inflation accelerated in December.

US Dollar (USD) Slumps as Markets Remain Upbeat

After falling sharply on Friday, the US Dollar’s (USD) selling bias carried through into this week’s session, with the currency facing some broad losses on Monday.

The persistent USD selling appeared to be driven by rising market risk-appetite, with investors shunning the safe-haven currency as US-China trade optimism drove them towards riskier assets.

This downtrend in the US Dollar may continue when markets return from the New Year as well with the release of the ISM manufacturing PMI, which is expected to show the US factory sector suffered its fifth consecutive contraction in December.

Canadian Dollar (CAD) Muted as Analysts Warn of Oil Profit Taking

The Canadian Dollar (CAD) was left directionless through yesterday’s trading session in spite of WTI oil prices climbing above $62 a barrel for the first time since mid-September.

This appeared to be driven by fears that the commodity could be hit by some profit taking as 2019 comes to a close.

Australian Dollar (AUD) Strengthened by Risk-On Mood

The Australian Dollar (AUD) ticked higher at the start of the week as risk appetite improved after reports the US-China phase one trade deal will be signed next week.

The ‘Aussie’ maintained this upward trajectory overnight as China’s manufacturing PMI printed higher than expected in December, fuelling hopes of increased demand for Australian exports.

New Zealand Dollar (NZD) Fluctuates on RBNZ Speculation

The New Zealand Dollar (NZD) traded in a wide range overnight on Monday as speculation of further rate cuts from the Reserve Bank of New Zealand (RBNZ) in 2020 infused some volatility into the ‘Kiwi’.

 

Matthew Andrews

Contact Matthew Andrews


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