GBP: GBP/EUR Can't Hold Gains + Latest on Sterling to Dollar, Aus Dollar and Canadian Dollar (CAD, EUR, USD, AUD)
- Written by: Will Peters
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- Pound to euro exchange rate: 1.1966
- Pound to dollar exchange rate: 1.2569
- Pound to Aus dollar rate: 1.9434
- Pound to New Zealand dollar rate: 2.1562
- Pound to South African Rand rate: 22.8654
The pound euro exchange rate today: ECB creates a cheaper EUR
The euro slumped at mid-day Thursday when the ECB said it was cutting the refinancing rate to 0.15% from 0.25%. The bank also said it was cutting the deposit rate to -0.1%.
Keep in mind that this is not a massive move by any means, rather we are testing the late May highs.
Earlier we reported:
"EUR/GBP will be dependent on this afternoon’s ECB announcements. We see risk as skewed towards market disappointment, in such an event we could see GBP/USD get dragged higher with EUR/USD, suggesting EUR/GBP upside maybe limited. The 0.8160/70 will likely remain good resistance. But in the event of EUR weakness, we could see EUR/GBP test the recent lows," say Lloyds Bank Research.
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The biggest event on the euro's 2014 calendar comes into view on Thursday with the ECB widely predicted to cut the Eurozone's base interest rate.
The EUR has actually picked up ground against the GBP lately as markets square positions incase the ECB actually fails to act, an event that will lively trigger a EUR rally.
"GBPEUR retreated across the day from the highs of 1.2334 to post lows of 1.2272 as traders took their positions ahead of this morning’s services data. Sterling failed to take advantage of the poor reading of Eurozone inflationary data missing expectations," say International FX in a Wednesday note to clients.
Pound to US dollar exchange rate
The outlook for GBP/USD is dominated by the release of US Non-Farm payrolls on Friday.
Will the recent recovery in the US dollar exchange rate family extend recent gains further?
The short-term outlook for the GBP/USD is likely to remain week, there is little standing in the way of the USD at present it seems.
However, the longer-term picture remains favourable to the GBP which remains in a longer-term uptrend.
This is confirmed by Luc Luyet at MIG Bank:
"In the longer term, despite the break of the long-term rising channel, the lack of significant bearish reversal pattern suggests a limited downside risk.
"Indeed, the current weakness looks like a classic "zig-zag" (or A-B-C) correction. As a result, a medium-term bullish bias remains favoured as long as the support at 1.6661 (15/04/2014 low) holds. A major resistance stands at 1.7043 (05/08/2009 high)."
Pound to Australian dollar exchange rate
The Australian dollar has failed to fully capitalise on the latest GDP figures released today.
GDP grew 1.1% q/q in Q1, above the median economist expectations (+0.9% q/q).
Q4 growth was unchanged at 0.8% q/q, while annual growth in Q1 rose to a strong 3.5%.
Regarding the impact of the data on the policy path likely to be followed at the Reserve Bank of Australia, ANZ Bank say:
"For policy, today's numbers look to be broadly in line with the RBA’s forecasts in the May Statement on Monetary Policy, with the Bank also expecting lower quarterly GDP growth in coming quarters.
"The Governor's statement yesterday continued to suggest that the Bank is on hold for some time, with the slow gradual turn in the economy likely to generate little significant improvement in the unemployment rate this year."
Pound to Canadian dollar exchange rate
The Canadian dollar (CAD) exchange rate complex remains buoyant ahead of Wednesday's Bank of Canada decision.
No change in policy is expected, however markets will be reading into the tone at the Bank.
"The sense is that the BOC might play down the recent rise in inflation and maintain its cautionary outlook on the economy. That contrasts with expectations for the Federal Reserve in a couple weeks to keep paring back in stimulus," say Western Union in a note to corporate clients.
