25th June 2014

Pound Weakens Against US Dollar, Euro Strengthens as New Zealand and Australian Dollar Look Precarious

Pound Sterling

Euro to Pound

Wednesday sees the Pound weaker after Bank of England Governor Mark Carney dispelled hopes of an imminent interest rate rise, despite implying that one could occur in November earlier in the month.

Carney said: ‘We do need and all want a durable recovery. We don’t want business decisions and personal decisions taken today... that are based on expectations of interest rates that are unlikely to transpire.’

Euro (EUR)

The Euro has gained against a softened Pound this week and the Eurozone published positive data on Wednesday regarding consumer confidence. Beating the previous reading of 8.6 the German GfK Consumer Confidence gauge jumped to 8.9. It was expected to stay the same. Thursday will see the release of French jobseeker data which may help to continue the Single Currency’s gains.

US Dollar (USD)

Expectations regarding US Consumer Confidence and New Home Sales data were smashed during the week, giving the weakened ‘Buck’ a positive boost. Wednesday will see influential GDP data published as well as Personal Consumption, Durable Goods, and PMI statistics which could help the US Dollar to gain back some stability against the other majors.

Economy expert Kathy Lien has commented: ‘The US Dollar traded higher against most of the major currencies today on the back of stronger economic data.’

Canadian Dollar (CAD)

The Canadian Dollar has seen highs recently as commodity prices have risen in light of the Iraq conflict and stronger than expected inflation data. However the mid week sees a lowering of the ‘Loonie’ after favourable US housing data has been released.

Australian Dollar (AUD)

The ‘Aussie’ has seen gains from productive Chinese data this week, however with an escalating Iraq crisis the commodity currency is unpredictable. As the US publishes strong data the ‘Aussie’ has no choice but to soften against it.

BK Asset Management MD Kathy Lien has stated: ‘The Australian Dollar and New Zealand Dollar have been trading near their year-to-date- highs and in order for either currency to set a new milestone, unambiguously positive news is needed, otherwise they are vulnerable to profit taking.’

New Zealand Dollar (NZD)

The ‘Kiwi’ has seen a drop against a strengthening US Dollar with the fear of the commodity currency weakening in the global forex market in light of conflict in Iraq.

Currency expert for the Bank of New Zealand Raiko Shareef stated: ‘The improvement in US data, accompanied by an increasing debate on whether the Fed is being complacent on inflation risks is perhaps taking some shine off high-yielding currencies such as the Australian Dollar and the New Zealand Dollar.’

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