Exchange Rates: Pound Dollar Rate Slides, Euro Dollar Fails to Break 1.37

The US dollar is however on the front-foot at the time of writing owing to a strong data release from the US economy:

• The pound to dollar exchange rate is unchanged on a day-to-day basis at 1.7153.
• The pound to euro exchange rate is 0.12 pct higher at 1.2620.
• The pound to NZ dollar rate is 0.2 pct higher at 1.9639.
• The pound to Australian dollar rate is 0.09 pct lower at 1.8338.

Please be aware that the above mid-market quotes are subject to a discretionary spread levied by your bank when making international payments. An independent FX provider will however seek to undercut your bank's offer and in some instances can deliver up to 5% more currency on execution. To learn more, please read here.

US dollar on front-foot, GBP to USD falls from weekly highs

The pound dollar rate fell after the news that the US economy added 288K jobs in the previous month, well ahead of analyst expectations for 212K, however forex traders have bought the dollar on the observation that June's surging rate of job creation was trumped by April's revised figure of more than 300,000.

Bill Kemp, head of dealing at the forex specialists FEXCO, does however question the extent to which the USD will be able to rally:

"Such blockbuster jobs numbers will send the Dollar into the Independence Day holiday with a spring in its step. Not since the start of 2000 has the US enjoyed such a run of job creation - and the miserable GDP performance of the start of the year is fast becoming a distant memory.

"But despite the Greenback's immediate rally, not even Tim Howard can save it from the currency markets' niggling concerns over the Fed's interest rate policy.

"With Janet Yellen warning this week that she will not raise interest rates to fight financial bubbles, noone is expecting the Fed's interest rate policy to shift until well into next year.

The pound exchange rate complex: GBP boosted by PMI data

The British pound (GBP) is on the move higher once again thanks to confirmation that the UK economy is in no mood to slow down this summer.

Released on Tuesday was the first of the much-watched PMI series, UK Manufacturing PMI rose at its fastest pace in seven months in June and markets are betting that the relentless pace of growth in the economy will force the Bank of England to raise rates towards the end of the year. This was followed by the Construction PMI which showed construction firms were increasing their order books at unprecedented levels.

Currency markets are positioned for further gains in the GBP while technical studies in the sterling / euro and sterling / dollar rates confirm momentum in both short- and long-term timeframes are in positive territory.

The euro dollar exchange rate today

The US dollar remains pressured by last week’s surprisingly low Q1 GDP reading that highlighted the very slow start to the year for the world’s largest economy and underscored the view that the Fed is in no rush to begin normalizing monetary policy anytime soon.

As a result the euro dollar rate continues to hover near the top of its range against the dollar, just off of a six-week high.

The single currency was little moved after the 18-member bloc’s unemployment rate reportedly inched lower in May.

Investors await the ECB’s meeting late in the week for clues on the outlook for euro zone monetary policy and for any signs that policymakers are again becoming concerned with the single currency’s strength.

"The US dollar suffered more losses against several of its major rivals on Monday after comments from one Federal Reserve Member promoted the US currency as a cheap but very reliable funding currency for risky carry trades," says Nawaz Ali at Western Union.

The greenback slumped to multi-week lows against the Swiss franc, euro and Japanese yen on while hitting its lowest point since October 2008 against the British pound.

The move came on the back of comments about record low US interest rates ahead of key US economic data releases over the next few days.

The pound euro exchange rate today

The pound rallied to within touch of 2014 highs against the euro after June’s PMI for the U.K’s manufacturing sector rose to 57.5 in June from May’s 57.0, nicely above the forecast for 56.8.

"It was the fastest rate of expansion in the U.K.’s manufacturing sector in seven months and added to the growing list of economic reports that have signaled an increasingly robust U.K. recovery. Importantly, the drivers of the recovery are becoming more broad based than the previous consumer/housing lead-rebound and argue for the Bank of England to being raising rates, possibly as soon as the end of this year," says Omer Esiner at Commonwealth Foreign Exchange.

That outlook should continue to keep the pound well supported.

Elsewhere,positive manufacturing numbers from China plus the Reserve Bank of Australia’s interest rate decision did little to unsettle the Aussie dollar.

Australia’s currency remains significantly above January’s multi-year lows against the British pound and is another beneficiary of US dollar weakness.