ECB action fails to hold down euro
[vc_row][vc_column][vc_column_text]The pound (GBP) failed to cling onto its monthly high as hopes for a potential Brexit extension dwindled.
Although the European Central Bank (ECB) delivered a fresh volley of monetary loosening, the euro (EUR) soon bounced back from its initial decline.
Support for the US dollar (USD) proved limited as the US economy offered mixed signals in the face of easing US-China trade tensions.
Meanwhile, moods toward the risk-sensitive Australian dollar (AUD) and New Zealand dollar (NZD) improved as both Chinese and US officials showed signs of increasing goodwill ahead of next month’s trade talks.[/vc_column_text][/vc_column][/vc_row][vc_row][vc_column][vc_column_text]
Short-lived Brexit optimism fuels pound volatility
Reports that cabinet members are pushing Prime Minister Boris Johnson to request another extension to the Brexit deadline offered GBP exchange rates a boost, although this proved short-lived.
The mood towards the pound soured as Johnson reaffirmed his hard-line stance on Brexit and the resurgent risk of a no-deal scenario increased.
This left GBP exchange rates in a slump ahead of a key meeting between the British premier and European commission president Jean-Claude Juncker, with an air of uncertainty overshadowing the economic outlook.
UK average weekly earnings showed better-than-expected growth in the three months to July, clocking in at 4%, but the data is unlikely to encourage the Bank of England (BoE).
GBP exchange rates could fall further from their recent peak if Thursday’s central bank meeting yields dovish signals from policymakers.
With forecasts pointing towards easing in the headline consumer price index and weaker inflationary pressure, the case for an interest rate cut builds.
However, if the BoE chooses to signal a more optimistic outlook pound sentiment could turn a shoulder to political jitters and find a fresh rallying point.[/vc_column_text][/vc_column][/vc_row][vc_row][vc_column][vc_column_text]
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* Information courtesy of Currencies Direct, Philip McHugh
Joining the corporate trading desk in 2007, Phil now over sees all of Currencies Direct’s corporate dealing activity. Having gained experience working with hundreds of businesses to optimise international payments processes and execute comprehensive risk management strategies, Phil currently works with a portfolio of corporate clients whilst managing Currencies Direct’s overall market exposure
Phil has FCA approval and has completed the Certificate in International Treasury Management (CertiTM)
The contents of this report are for information purposes only. It is not intended as a recommendation to trade or a solicitation for funds. Currencies Direct cannot be held responsible for any loss or damages arising from any action taken following consideration of this information. This article was written by Currencies Direct.
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