Exchange Rate News Today: GBP Strengthens, EUR Ticks Higher and USD Plummets
Pound Sterling (GBP) Exchange Rate Gains despite Slowing Economic Growth
The Pound Sterling advanced versus the majority of its most traded currency rivals on Tuesday. The appreciation was in the face of disappointing growth data as traders reconsidered the impact of political uncertainty. First quarter UK Gross Domestic Product came in at 2.4% on the year, missing the median market forecast growth of 2.6%.
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‘Pound strength in large part has been a function of Dollar weakness,’ said Neil Jones, head of hedge-fund sales at Mizuho Bank Ltd. in London. ‘Meanwhile, the expectations for Pound fallout from the election are on the decline. GDP data is also considered somewhat backward-looking.’
Sterling could see volatility on Wednesday with Nationwide House Prices data due for publication.
Euro (EUR) Exchange Rate Edges Higher as Varoufakis gets Sidelined
After Friday’s Eurogroup meeting saw Eurozone officials unanimously unhappy with Greek Finance Minister Yanis Varoufakis, the Greek government opted to replace him with Minister of International Financial Relations, Euclid Tsakalotos. The change has been well received by investors who hope that the negotiations will see more progress with Tsakalotos.
Greek Prime minister Alexis Tsipras has conceded that Varoufakis was not well received by Eurozone officials, but said that he remains fully behind his Finance Minister. ‘They [creditors] couldn’t counter his economic arguments rationally so they went for him claiming he didn’t understand Eurozone rules and regulations, that his reforms weren’t good enough,’ said one official. ‘Tsipras knows this is not about Varoufakis, but his government, because it has dared to take on the system that is Europe’s neoliberal doctrine. He knows that if one goes the other goes too, which is why Varoufakis is here to stay.’
US Dollar (USD) Exchange Rate Dives on Damp Consumer Confidence
Having registered a string of disappointing domestic data results of late, the US Dollar softened versus all of its most traded currency rivals. The depreciation continued on Tuesday after Consumer Confidence failed to meet with the median market forecast of a rise from 101.4 to 102.5, with April’s result dropping to 95.2.
‘The big drop in gasoline prices looks like it’s over, and prices are edging up a little bit, so that’s a little bit of a negative,’ said Jim O’Sullivan, chief US economist at High Frequency Economics in Valhalla, New York. ‘There is a little bit of acceleration under way in nominal wages, but it’s not a big deal so far.’
Australian Dollar (AUD) Exchange Rate Rallies on Positive Data
With market sentiment significantly improved, and with the US Dollar continuing to trend bearishly, the Australian Dollar advanced versus the majority of its most traded currency competitors. The ‘Aussie’ (AUD) climb was aided by positive domestic data. ANZ Roy Morgan Weekly Consumer Confidence Index climbed from 108.8 to 111.8 in the week ending April 26th, and the Conference Board Leading Index gained by 0.5% in February.
‘A good jobs report for March, continued strength in housing markets and the government’s positioning of the upcoming budget appear to have helped support confidence in the past week,’ said ANZ chief economist Warren Hogan.