UK Q2 current account data released earlier showed that the gap between British imports and exports is narrowing. The data was far better than anticipated, taking the Pound higher against almost all of the other major currencies on the day. Bank of England Governor Mervyn King’s comments which questioned the efficacy of the Bank’s QE scheme were less welcome for investors holding Sterling-denominated assets. NEAR-TERM OUTLOOK – NEUTRAL.
US DOLLAR – The Pound Dollar exchange rate (GBP/USD) is 1.6009
The Greenback has continued in its weakening bias today as global appetite for risk continues to show signs of improving. This afternoon’s US Consumer Confidence survey could cause a halt to the Dollar’s losses if it disappoints, otherwise, any news from the Eurozone debt summit over the next 48 hours is sure to affect Dollar levels. NEAR-TERM OUTLOOK – NEGATIVE.
EURO – The Pound Euro exchange rate (GBP/EUR) is 1.1500
This morning’s German GfK Consumer Confidence Survey bettered analysts’ expectations, showing a surprise improvement on last month’s figure. Europe’s single currency has held steady on the day as investors nervously await the outcome of tomorrow’s Eurozone debt summit. Announcements from the summit are almost certain to cause movement for the Euro later in the week. NEAR-TERM OUTLOOK – NEUTRAL.
AUSTRALIAN DOLLAR – The Pound Australian Dollar exchange rate (GBP/AUD) is 1.5327
The Aussie has continued to push higher against the other majors as risk sentiment improves in anticipation of a positive result from the Eurozone’s debt summit. Tonight’s release of key Australian CPI inflation data for Q3 could take the steam out of the AUD’s rally of recent sessions if the figure follows the pattern of last night’s New Zealand inflation data and prints below expectations. NEAR-TERM OUTLOOK – NEUTRAL TO POSITIVE.
CANADIAN DOLLAR– The Pound Canadian Dollar exchange rate (GBP/CAD) is 1.6124
The Bank of Canada have elected to maintain their key lending rate at 1.00% this afternoon in a move which was generally anticipated by market participants. However, the decision was not 100% factored in, so the CAD has experienced some limited selling pressure in the currency markets since the announcement. This afternoon’s US Consumer Confidence survey is sure to affect the CAD as much as it does the Greenback, so should be closely watched. NEAR-TERM OUTLOOK – NEUTRAL TO NEGATIVE.