Pound gains on AUD, NZD, one-week low for GBP/EUR

With UK news lacking on Thursday the pound was left to its own devices, and the currency largely spent the day standing firm against most of its rivals.

GBP/EUR dropped from €1.1418 to €1.1346, GBP/USD fluctuated between $1.2900 and $1.3028, GBP/AUD advanced to AU$1.7120 from AU$1.6859, GBP/NZD jumped from NZ$1.7680 to NZ$1.7861 and GBP/CAD achieved C$1.6912 before closing the day at C$1.6826.

Will the pound enter the weekend on a high? Keep scrolling to find out...

What’s been happening?

All things considered, the pound put on a pretty solid performance on Thursday.

GBP shook off concerns about this week's trio of below-forecast UK sector reports and edged higher against a number of the majors.

The recent hints from Bank of England (BoE) officials that tighter policy is on the horizon still appear to be propping up the pound, with many experts attributing the June dip in output to political uncertainty surrounding the UK election.

However, Sterling failed to hold its own against the euro and the GBP/EUR pairing fell to a one-week low after the minutes from the last European Central Bank (ECB) policy meeting were published.

As ECB officials have spent the last couple of weeks downplaying the odds of quantitative easing being unwound, the minutes were viewed as being surprising encouraging of tighter policy. The euro subsequently strengthened and drove the pound lower.

Meanwhile, the US dollar came under a little strain ahead of the release of the US non-farm jobs figures. The ADP employment report fell short earlier in the week, leading to concerns that today's numbers will also prove unimpressive. As further lacklustre US data could prevent the Federal Reserve from raising interest rates for a third time this year, a poor result could leave the US dollar softer heading into the weekend.

What's coming up?

Of the UK reports set for release next week the most influential will be the nation’s employment numbers.

An uptick in average earnings would be pound-supportive, but if wage growth dips we could see Sterling spiral lower.

Other news to watch out for over the coming week includes several speeches from Federal Reserve Chairwoman Janet Yellen, Germany’s final consumer price index for June, and a string of US ecostats – retail sales, industrial/manufacturing production and the University of Michigan Confidence measure among them.

If the US developments weigh on the odds of the Federal Reserve increasing interest rates again before the close of the year the GBP/USD exchange rate could return to trading above $1.30.

The Bank of Canada (BOC) is also due to deliver its latest interest rate decision next Wednesday. If the central bank follows through on recent hints and increases borrowing costs, we can expect significant gains for the Canadian dollar.

We’re here to talk currency whenever you need us, so get in touch if you want to know more about the latest news or how it could impact your currency transfers.

Phil McHugh,
Trading Floor Manager

Phil provides dealing and hedging services whilst also helping to manage Currencies Direct overall market exposure.