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Sterling sinks as US Dollar soars

Published: Wednesday 20 June 2018

  • Canadian Dollar stronger – but tentative on NAFTA outcomes…
  • Euro suffers from trade war fears
  • Australian Dollar dwindles
  • Disappointing data for New Zealand
The Pound has fallen again as the Brexit bill was defeated by the House of Lords, creating further uncertainty for Sterling and the future of the economic landscape for the UK. Coming at a time when the US Dollar is the highest in almost a year, the divide between the Pound and the US Dollar feels even wider and reflects an exchange rate last seen at the end of 2017.

The Pound sank down to around 1.315 against the US Dollar and 1.135, also slumping against its other key currency partners. Findings in the Confederation of British Industry (CBI) industrial trends survey were positive, however, showing UK manufacturing performing strongly again and high demand for new business. This could help provide some support for Sterling against its currency compatriots and, as hopes of a Brexit bill compromise emerge, soften any further blows from US Dollar strength, which could only get stronger if trade fears intensify further; and as US economic data helps to drive sentiment in the currency markets.

Canadian Dollar stronger – but tentative on NAFTA outcomes…

The Canadian Dollar is also enjoying a moment of strength. The CAD benefitted from rising crude oil prices and US Dollar strength, pushing up against its North American currency partner.

Euro suffers from trade war fears

The Euro has suffered from the latest European Central Bank (ECB) announcements, as the surprise announcement that an end was near for quantitative easing shocked the markets and the single currency. Trade war fears also taken their toll on the Euro, as Trump takes a strong stance on Chinese trade tariffs. US Dollar strength is weighing on all the major currencies and the Euro and Pound have borne the brunt so far. However, as initial market reactions calmed, the Euro has managed to claw back some strength.
Euro notes with coins
Australian Dollar dwindles

Meanwhile, in Asia Pacific, the Australian Dollar has received a knock from several data announcements. These include a cautious central bank, lack of interest rate movement, falling house prices, and to top it all off, poor Chinese economic performance, which weakens the Australian Dollar given the critical export-import relationship between Australia and China and the effects of China’s economic strength on the commodity currencies, the AUD included.

Disappointing data for New Zealand

New Zealand found out overnight that consumer confidence is low and the latest quarterly currency account deficit has widened to a nine-year high, as well as dairy prices falling. However, the New Zealand Dollar is still holding its own.
Wednesday’s #WorldCupWisdom
What can businesses learn from the World Cup? An interesting piece in yesterday’s CityAM offers lessons for leaders in business from the leaders on the pitch.
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