Pound holds above $1.30 against USD, Euro Exchange Rates Higher on Upbeat Mood
The Pound weakened on the UK Chancellor, Rishi Sunak, warning of ‘very difficult and uncertain time’ as the UK enters recession. However, GBP held 1.30% against the US Dollar and GBP/USD is strengthening this morning.
Meanwhile, upbeat trade caused USD exchange rates to stumble, which in turn is rallying the Euro to US Dollar exchange rate.
Pound (GBP) Undermined by Chancellor’s Warning, But GBP/USD Rises
The Pound (GBP) fell on Wednesday, in response to Chancellor Rishi Sunak’s warning in the wake of the UK’s latest GDP figures.
Yesterday’s data revealed the UK economy shrank by a record 20.4% in the second quarter, plunging the UK into its first recession in over a decade.
However, while the size of the UK’s contraction had already been priced in by GBP investors, Sunak sent Sterling lower with his warning that ‘hard times are here’ and that many more people will lose their jobs in the months to come.
In the absence of any notable economic releases through the remainder of the week, any upside potential in the Pound looks limited amidst concerns over the UK’s impending unemployment crisis.
Added to this, EU-US trade tensions renewed again this morning, causing GBP/EUR to trade in a narrow range.
Euro (EUR) Gains in Upbeat Trade, Euro to US Dollar Rallying
The Euro (EUR) rebounded yesterday as a more positive market tone lent the single currency an edge against its main peer, the US Dollar (USD). This is rallying the Euro to US Dollar exchange rate this morning.
Helping to improve the appeal of the Euro was the publication of the Eurozone’s industrial production figures, which revealed another strong expansion in factory output throughout the block in June.
However, any further gains may be hampered today after Germany’s consumer price index confirmed the country slipped into a state of deflation last month.
US Dollar (USD) Slips as Positive Inflation Buoys Market Sentiment
The US Dollar (USD) fell back during yesterday’s session, in response to a stronger-than-expected US CPI reading in July.
US inflation was reported to have jumped to 1% in July, striking its highest levels since March and cheering investor sentiment amid hopes the US economy is on the road to recovery.
Coming up, the focus today will be on the latest US initial jobless claims. Will another elevated reading put pressure on the US Dollar later this afternoon?
Canadian Dollar (CAD) Bolstered by Robust Oil Prices
The Canadian Dollar (CAD) trended higher on Wednesday, with the commodity linked ‘Loonie’ again finding support from stronger oil prices following a larger-than-expected draw in US crude stocks last week.
Looking ahead, the International Energy Agency’s (IEA) revised forecast could drive some movement in the Canadian Dollar today. The drop in their oil demand forecast could hit oil prices, and in turn CAD.
Australian Dollar (AUD) Firms on Stronger-than-Expected Jobs Report
The Australian Dollar (AUD) strengthened overnight on Wednesday, in response to Australia’s better-than-expected employment figures.
These revealed that the unemployment rate rose to 7.5% versus the 7.8% jump forecast in July, with employment growth printing nearly three times higher than expected.
New Zealand Dollar (NZD) Undermined by RBNZ Comments
The New Zealand Dollar (NZD) fell back in overnight trade after the Reserve Bank of New Zealand’s (RBNZ) Yuong Ha suggested the bank would like to see weak NZD exchange rates.