Exchange Rate Outlook: Pound Close to Two-Year High

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Pound Sterling

After a Bank of England official tempered housing bubble fears by intimating that the central bank is prepared to take action to ease the situation, the Pound rose to an almost two-year high against the US Dollar. Sterling was little-changed against the Euro and with UK news thin on the ground today additional Pound movement is unlikely.

GBP/EUR is trading in the region of 1.1967 and GBP/USD is trading in the region of 1.6365

US Dollar

After hitting a five-year high against the Yen last week as a result of the surprising FOMC decision, the ‘Greenback’ trimmed gains over the weekend as investors bet that the currency’s movement will be restrained as the New Year approaches. However, today’s US personal income/spending report and the University of Michigan confidence index may inspire ‘Buck’ movement as the day progresses.

USD/GBP is trading in the region of 0.6111 and USD/EUR is trading in the region of 0.7307

Euro

Last week the Euro softened against several of its most traded rivals as the European Union had its credit rating downgraded and Eurozone construction output dropped sharply. While losses were limited as consumer confidence in the currency bloc grew, the Euro still ended the week softer against several of its major peers and consolidated declines before trading began on Monday.

EUR/GBP is trading in the region of 0.8356 and EUR/USD is trading in the region of 1.3675

Australian Dollar

After a pretty negative week for the Australian Dollar the currency was able to recover losses during Australasian trading and edge away from a three-year low against its US counterpart. A lack of pertinent economic data means that notable ‘Aussie’ movement is unlikely to occur in the hours ahead.

AUD/GBP is trading in the region of 0.5459, AUD/EUR is trading in the region of 0.6531 and AUD/USD is trading in the region of 0.8939

New Zealand Dollar

The ‘Kiwi’ declined against both its Australian and US counterparts before markets closed for the Christmas break. However with last week’s domestic data indicating that New Zealand’s recovery is gathering momentum, economists are expecting the ‘Kiwi’ to remain on an upside bias into the New Year.

NZD/GBP is trading in the region of 0.5021, NZD/EUR is trading in the region of 0.5999 and NZD/USD is trading in the region of 0.8207

Canadian Dollar

On Friday the Canadian consumer price index confirmed that inflation remains below the Bank of Canada’s target. Consequently, the ‘Loonie’ softened against the majority of its peers and approached a three-year low against the ‘Buck’. Today’s Canadian growth report is likely to trigger ‘Loonie’ volatility during North American trading.

CAD/GBP is trading in the region of 0.5737, CAD/EUR is trading in the region of 0.6866 and CAD/USD is trading in the region of 0.9391

These exchange rates were correct as of 9:10 am

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