interest rate cuts by the Bank of England
Bank exchange rates news update for 30th July 2012
With last week's appalling second quarter GDP print continuing to weigh on the Pound, plus the imminent threat of an interest rate cut from the Bank of England, Sterling has found it hard to hold its own against the higher yielding currencies. On Friday the Pound decreased by 0.62% against the Australian Dollar, 0.41% against the Canadian Dollar and 0.98% against the New Zealand Dollar.
However as risk sentiment picked up of hopes of assertive European Central Bank action to support a stronger Eurozone, the Pound managed to post gains against the safe-haven currencies as the prospect of trade increasing between the UK and Eurozone bolstered the UK currency. The Pound increased by 0.33% against the US Dollar and 0.50% against the Japanese Yen on Friday.
The Pound is currently trading in the region of 1.2773 against the Euro and 1.5734 against the US Dollar.
Last week the US Dollar decreased by 1.4% against the Euro, 0.7% against the Pound, 1.0% against the Australian Dollar and 1.3% against the New Zealand Dollar. Against the Japanese Yen, the US Dollar finished the week's trading at the same level and against the Canadian Dollar, the US Dollar appreciated by 0.9%.
On Friday the US Dollar was served up a plate of positive economic data as the Annualized Q2 Gross Domestic Product figure printed at 1.5%, beating analysts' predictions of 1.4%. The US Personal Consumption data for the second quarter also exceeded expectations coming in at 1.5% rather than 1.3%. To cap things off the University of Michigan Confidence Survey improved from 72.0 to 72.3 in July.
As strong US economic data is seen as supportive of risk sentiment, it sent traders looking for more profitable investments and subsequently the US Dollar depreciated in value.
Currently, the Dollar is trading is trading in the region of 0.8116 against the Euro and 0.6350 against the British Pound.
Comments from European Central Bank President Mario Draghi that the ECB are willing to do "whatever it takes to save the Euro," are continuing to prop up the single currency as growing risk appetite looks to benefit the Euro. Although Draghi's comments were largely unspecific, investors have taken them in a positive light as they were also backed up by a joint statement from French Prime Minister Francois Hollande and German Chancellor Angela Merkel.
The Euro's rise has largely been a result of speculation, and hopes of Central Bank stimulus from both the ECB and the Federal Reserve over the coming week should allow the Euro to carry on growing.
The Euro is currently trading in the region of 1.2321 against the US Dollar and 0.7822 against the British Pound.
The Australian Dollar performed extremely well on Friday as renewed risk appetite from Draghi's statement of intent, to support the Euro through thick and thin, sent investors in the direction of the high-yielding currency. The Australian Dollar will also have been helped by the news that the world's largest economy - the United States - posted a better-than-expected second quarter GDP print. As global growth prospects appeared to pick up, the Australian Dollar rallied by 2.5% against the US Dollar and 2.9% against the Japanese Yen.
Currently, the ‘Aussie’ is trading in the region of 0.6658 against the British Pound, 0.8508 against the Euro and 1.0483 against the US Dollar.
New Zealand Dollar
The New Zealand Dollar mimicked the Australian Dollar in the way it posted significant gains against the majority of its major currency peers.The decision from the Reserve Bank of New Zealand to maintain the overnight cash rate at 2.50% has allowed the 'Kiwi' Dollar to rise on the winds of risk sentiment as investors look to benefit from its high yields.
Currently, the New Zealand Dollar is trading in the region of 0.5146 against the Pound, 0.8094 against the US Dollar and 0.6576 against the Euro.
On Friday afternoon a rumour entered circulation that ECB President Mario Draghi and Bundesbank President Jens Weidmann had agreed to hold talks with regards to discussing a new bond purchasing scheme, a Eurozone interest rate cut and a new series of cheap loans for banks. The news sent global stocks higher, and the Canadian Dollar was able to appreciate against the major currencies (Sterling, US Dollar, Japanese Yen, and Euro) as riskier assets became more favourable to investors. Conversely, the 'Loonie' lost ground to the higher-yielding Antipodean currencies.
Currently, the ‘Loonie’ is trading in the region of 0.9968 against the US Dollar, 0.8093 against the Euro and 0.6327 against the British Pound