- Pound mixed during ‘Marmitegate’ – Potential for positive effects of soft GBP
- US Dollar weakened by Chinese trade hiccup – Signs of slowdown panic investors
- Eurozone trade stats out tomorrow – Fed Chair to speak Friday
This afternoon, the Euro has managed to stage a recovery against the US Dollar, though against the fluctuating Pound, the single currency has dipped overall.
In the EUR USD exchange rate, losses have been triggered for the ‘Buck’ by the drop recorded for China’s trade surplus in September. Although the US Dollar was previously riding high on Fed interest rate hike optimism, this latest news has stirred renewed fears about a possible Chinese economic slowdown.
While the Pound hasn’t exactly rallied today, it seems as though investors have shifted their focus from the weak Pound to the potential for UK exports to increase. Additionally, domestic manufacturing may also rise in the face of higher import costs to the UK.
(Last updated October 13th, 2016)
Despite yesterday afternoon’s heated ‘Brexit’ debate in the House of Commons, the Pound has remained weak overall. The US Dollar has been supported by yesterday evening’s Fed minutes for September, which showed that the decision to freeze interest rates was a close call.
Euro Exchange Rate News: ECB’s Mersch Claims Raising Inflation Targets ‘Unconvincing’ Idea
The Euro has managed to record a 0.2% against the Pound (EUR GBP) and has also crept up against the US Dollar (EUR USD) today, thanks to comments made last night by the ECB’s Yves Mersch.
While Mersch had spoken earlier on during the day, his later speech focused on possible future methods for controlling inflation within the Eurozone. Focusing in particular on raising inflation rate targets in order to increase expectations, Mersch argued that;
‘I am not sure that this idea is entirely convincing. At a time when inflation is low everywhere, and when central banks are running very accommodative monetary policies just to achieve that, one can question whether such signals would really be credible. I see a risk, in fact, that changing our strategy to rely on fuzzy concepts and unobservables would only end up damaging our credibility’.
This speech was positively received by investors, given that it suggested a steady level of ECB management of the single currency bloc.
Pound Low after ‘Brexit’ Debate, US Dollar Aided by Almost-Hawkish Fed Minutes
Despite having a positive start to Wednesday’s trading after a U-turn by the Prime Minister, the Pound failed to capitalise on the hastily-granted ‘Brexit’ debate that had previously been blocked by Theresa May.
Over the space of hours, the Government increasingly came under fire for apparently lacking any clear ‘Brexit’ negotiation strategy, which angered assembled MPs and resulted in confidence in the Pound dropping once again.
The US Dollar has maintained its bull-run over the current week, rising 0.3% against the Pound and recording a number of significant gains elsewhere.
The latest US input has come from yesterday’s Fed minutes for September, which showed that the decision to freeze the US interest rate instead of hiking it last month was a ‘close call’, further adding to sentiment that another rate hike will take place in December.
Future EUR GBP USD Forecast: Euro Losses Could Continue Tomorrow on Expected Trade Balance Decline
The next Eurozone data to watch out for will arrive tomorrow morning, when the August trade balance result comes in. The Euro could well drop if forecasts prove accurate, given that the current surplus of 25.3bn is expected to dip to 22.4bn on the month.
UK contributions tomorrow will be limited to the morning’s annual August construction output result, which is predicted to ‘improve’ from -1.5% to -1.1%.
The US is set to remain a hive of activity in the near-term, with Fed speeches due this afternoon along with gas and oil stock figures.
Tomorrow will bring comments from Fed Chair Janet Yellen, as well as US retail sales results for September. A rise has been forecast on both the month and the year.
Current Interbank Exchange Rates
The Euro Pound (EUR GBP) exchange rate was trending in the region of 0.90 and the Pound Euro (GBP EUR) exchange rate was trending in the region of 1.10 today.
The Euro US Dollar (EUR USD) exchange rate was trending in the region of 1.10 and the US Dollar Euro (USD EUR) exchange rate was trending in the region of 0.90 today.
The Pound US Dollar (GBP USD) exchange rate was trending in the region of 1.21 and the US Dollar Pound (USD GBP) exchange rate was trending in the region of 0.82 today.