Renewed Stock Market Slump Bolsters Demand for Euro (EUR), US Dollar (USD) Today
With global stock markets seeing a fresh wave of losses on Tuesday morning the Euro (EUR) and US Dollar (USD) have been shored up by a strong resurgence in safe-haven demand. Consequently, with little domestic data to shore up the Pound (GBP), the GBP/EUR exchange rate is trending lower at 1.3069 while the GBP/USD pairing is slumped at 1.4186.
While Pound Sterling (GBP) regained some measure of strength following an improved public sector borrowing report, fresh market turmoil has seen the Euro (EUR) and US Dollar (USD) bolstered on Monday morning.
Pound Sterling (GBP) Shored up by Stronger Public Sector Borrowing Figure
Ahead of the weekend the Pound Sterling to Euro (GBP/EUR) and Pound Sterling to US Dollar (GBP/USD) exchange rates enjoyed a resurgence on the back of a better-than-expected UK Public Sector Net Borrowing figure. New government debt in December narrowed further than traders had anticipated from 12.9 billion to 6.9 billion Pounds, suggesting that Chancellor of the Exchequer George Osborne may yet be able to meet the targets set out in his Autumn Statement. This stronger showing helped to push the Pound up against rivals, although the day’s December Retail Sales data proved unexpectedly weak in contrast.
However, a more bearish outlook has returned to Sterling on Monday with little in the way of domestic data to prompt fresh demand. Later this morning the CBI Business Optimism Index is unlikely to shore up the softening Pound, with business confidence expected to have contracted further from -12 to -15. Concerns over the future of the UK’s membership of the European Union have been weighing on the currency once again this week, following comments from the World Economic Forum at Davos, and are currently reducing the appeal of the Pound.
Dovish Draghi Fails to Weigh on Euro (EUR) Exchange Rate as Pundits Doubt Odds of Imminent Monetary Loosening
Although European Central Bank (ECB) President Mario Draghi returned to dovish form last week, stressing the central bank’s ability and willingness to act further on monetary policy if necessary, the initial impact of the comments has since worn off. Investors remain largely sceptical of Draghi’s ability to deliver on his dovish promises after markets were disappointed by the lack of loosening introduced at the December policy meeting. Consequently the Euro (EUR) has been recovering lost ground on Monday morning, in spite of the latest German IFO Business Sentiment Surveys showing that confidence within the Eurozone’s powerhouse economy has generally weakened in January.
US Dollar Currency News: USD Recovers Ground as Oil Rally Stalls
Demand for the US Dollar (USD) was dented as a general stock market rally reduced safe-haven sentiment and the East Coast of the US was hit by severe snowfall, potentially damaging economic output. However, the latest slump in oil prices has helped to bolster the ‘Greenback’ against the Pound this morning as pundits struggle to maintain a more bullish outlook over commodity prices and the slowing state of the global economy. This afternoon’s Dallas Fed Manufacturing Index may shore up the US Dollar further if manufacturing output is shown to have improved somewhat following the sharp contraction seen in December.
Current GBP, EUR, USD Exchange Rates
At the time of writing, the Pound Sterling to Euro (GBP/EUR) exchange rate was trending lower in the region of 1.3174, while the Pound Sterling to US Dollar (GBP/USD) pairing was trending narrowly at 1.4263. Meanwhile, the Euro to US Dollar (EUR/USD) exchange rate was making gains around 1.0826.