Exchange Rate Outlook: GBP Drops Following Osborne’s Comments

foreign_exchange_rates

Pound Sterling

The expectation that Chancellor of the Exchequer George Osborne will hint at the necessity of further spending cuts saw the Pound soften against the US Dollar as European trade began. However, if today’s UK services PMI confirms that the sector expanded at a faster pace than forecast in December Sterling could recover losses.

GBP/EUR is trading in the region of 1.2029 and GBP/USD is trading in the region of 1.6365

US Dollar

Before services PMI and investor confidence reports for the Eurozone were published the US Dollar was able to approach a four-week high against the Euro. The ‘Greenback’ also consolidated gains against the Pound as the odds of the Federal Reserve trimming stimulus again when it meets this month increased. If today’s ISM non-manufacturing report is upbeat it could help the US Dollar climb higher.

USD/GBP is trading in the region of 0.6114 and USD/EUR is trading in the region of 0.7351

Euro

The Euro began the local session softer against the US Dollar but slightly stronger against the Pound. As trading progressed reports confirmed that the French and Italian services sectors contracted in December. In the hours ahead Eurozone investor confidence and German inflation data could inspire notable common currency movement.

EUR/GBP is trading in the region of 0.8313 and EUR/USD is trading in the region of 1.3596

Australian Dollar

Last week the ‘Aussie’ was able to recover recent losses against its US and New Zealand counterparts. The South Pacific currency advanced further overnight as investors looked ahead to this week’s Australian retail sales and trade balance reports. The data are expected to show an increase in sales and a narrowing in the nation’s trade deficit. That being said, ‘Aussie’ gains were limited by the news that Australia’s AiG performance of service index dipped in December.

AUD/GBP is trading in the region of 0.5472, AUD/EUR is trading in the region of 0.6590 and AUD/USD is trading in the region of 0.8950

New Zealand Dollar

The ‘Kiwi’ spent much of last week trading in a narrow range against its major peers due to a lack of significant economic news for New Zealand. During Australasian trading the New Zealand Dollar slipped against the ‘Buck’ as China’s non-manufacturing PMI declined.

NZD/GBP is trading in the region of 0.5048, NZD/EUR is trading in the region of 0.6080 and NZD/USD is trading in the region of 0.8257

Canadian Dollar

On Friday commodity-driven assets like the ‘Loonie’ broadly strengthened as investors bet that the price of raw materials had bottomed out. The Canadian Dollar also benefited from the expectation that the improved economic outlook in the US would support the neighbouring currency.

CAD/GBP is trading in the region of 0.5752, CAD/EUR is trading in the region of 0.6920 and CAD/USD is trading in the region of 0.9423

These exchange rates were correct as of 9:15 am

Richard Martin
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After working in business development for a major UK currency brokers for several years, Richard left Britain to help set up the company’s Australian office and now lives and works in Queensland; making the most of his new Down-Under lifestyle.