Pound to Remain Supported Against Euro, Dollar Despite Supreme Court Ruling Argue Analysts

Pound to Remain Supported Against Euro, Dollar Despite Supreme Court Ruling Argue Analysts


The British Pound has slipped against the Euro and US Dollar following a ruling by the UK’s Supreme Court on the progress of the Brexit process.

Euro

Pound to Euro Latest

1.1657▲

0.12%

Previous Close:

1.1643

Today's High:

1.1673

Today's Low:

1.1558

US Dollar

Pound to US Dollar Latest

1.253▼

-0.03%

Previous Close:

1.2535

Today's High:

1.2544

Today's Low:

1.2419

Australian Dollar

Pound to Australian Dollar Latest

1.6521▼

-0.01%

Previous Close:

1.6523

Today's High:

1.6575

Today's Low:

1.6403

New Zealand Dollar

Pound to New Zealand Dollar Latest

1.7256▼

-0.35%

Previous Close:

1.7318

Today's High:

1.7346

Today's Low:

1.7146

South African Rand

Pound to South African Rand Latest

16.7193▼

-0.93%

Previous Close:

16.8764

Today's High:

16.8945

Today's Low:

16.5614

Canadian Dollar

Pound to Canadian Dollar Latest

1.6484▼

-0.61%

Previous Close:

1.6585

Today's High:

1.6627

Today's Low:

1.6409

The British Pound has a Confidence Problem

Pound sterling today

The pound sterling has a sentiment problem while the US dollar finds its employment report rally short-lived.

The Sunday papers astonished readers yesterday with the revelation that rich people use the tax haven, Panama, as a tax haven.

The really breathtaking bit was that 1.5m documents were stolen by a whistleblower.

Even on the cheapest paper that's 7.5 tons. What could the doorman have been thinking?

The weight on sterling was even greater than that at the end of last week, making the pound Friday's worst-performing major currency by quite a margin.

Thursday's UK data had shown greater-than-expected economic expansion in the fourth quarter of 2015, 0.6% instead of 0.5%, and strong mortgage approvals.

On Friday morning Nationwide's index put house prices 5.7% higher on the year and the manufacturing sector purchasing managers' index came in 51.0, shy of the predicted 51.2 but two ticks better on the month.

There was nothing among those figures to provoke a sterling sell-off.

So it must have been sentiment that sent it lower, because the pound lost an average of -0.8% on Friday - one euro cent - to the other dozen most actively-traded currencies.

The Brexit threat continues to loom over sterling.

On the week and the month it has fallen by an average of -1.4% and -2.6%, its only gains being against the US dollar.

Construction PMI in Welcome Beat of Expectations

The new week got off to a decent start for sterling as UK construction companies indicated a sustained upturn in overall business activity during March.

The Markit / CIPS Construction PMI read at 54.2, better than the 54.0 forecast and unchanged on the previous month’s reading.

Looking ahead, the majority of survey respondents (51%) expect a rise in business activity at their units over the next 12 months, while only 11% forecast a reduction.

So it would appear that the EU referendum is not weighing too heavily on this sector.

The Evolving Brexit Story Part 1

According to a survey of 120 UK CFO’s the biggest primary business risk remains Brexit. According to the poll 75% of those polled viewed remaining in the EU as preferable, this compares with 62% in Q4 ’15.

Although business is increasingly fearful of the risks of exit, the latest opinion poll from the Observer newspaper puts the Brexit campaign ahead with 43% deemed to be supporting exit as opposed to 39%, albeit 18% remain in the don’t know camp.

It will be that latter group that will likely decide the result of the poll. However, the anti-Brexit campaign has to mobilise young voters, those who are often reluctant to vote, unlike more exit orientated older voters.  Unless the young can be persuaded to vote the risks of Brexit are likely to continue to advance.

In the light of the opinion polls and a record Q4 current account shortfall this risks ongoing discussion of  investor flight, in the process bedeviling Sterling.

Expect this to be especially the case should services PMI fail to rebound in March; the February reading of 52.7 was the lowest since March ’13. We would favour GBP USD testing towards 1.4110/20.

The Evolving Brexit Story Part 2: Brexit and a Sovereign Downgrade

Standard & Poor’s has repeated its earlier warning that Britain could lose its much-prized AAA rating if the country votes to leave the European Union.

Writing an opinion piece on the Politico website, S&P’s chief sovereign ratings officer Moritz Kraemer said:

"Brexit would further polarize the U.K.’s political system, increase risks to effective, transparent and predictable policymaking, and diminish the U.K.’s long-term sovereign creditworthiness. Brexit also heightens potential risks to economic growth and the balance of payments, as well as domestic political threats to territorial integrity.

"Consequently, a vote for “Leave” would likely lead Standard & Poor’s to lower the U.K.’s AAA rating — a rating it has held, without interruption, since 1978. While the U.K.’s rating would likely remain high given its many institutional, financial and economic strengths, the U.K. would lose its place in the increasingly exclusive club of AAA-rated sovereigns."

US Labour Market Data Helps the Greenback

Friday's US ecostats were helpful to the dollar but, except against the pound, their effect was fairly short-lived.

Good as they were, they were not enough to make any real difference to the perception that the Federal Reserve is nervous about spoiling the economic picture with a too-hasty rate increase.

Nonfarm payrolls beat forecast by 10k, increasing by 215k in March, and average hourly earnings increased by a worthwhile 0.3%.

The two manufacturing PMIs either met or exceeded forecast and consumer confidence looked okay at 91.0.

In 90 minutes the dollar strengthened by a cent against the euro, only to give back more than half of that gain before the end of the day. Although market expectations for Fed policy vary almost by the week, Friday's data failed to make a case for higher rates in the near future.

Oil down, yen up

Reasonably or not, the current logic has it that lower oil prices do not just reflect, but actually cause economic weakness, increasing demand for safety. That seemed to be the case over the weekend, when the yen strengthened by 1.5% as the price of oil fell -4%.

The Australian dollar was one of the poorest performers, partly as a result of that general concern but also because of disappointing Australian retail sales, which were flat in February. The sales data on their own cost the Aussie a cent this morning.

Other data today cover Euroland unemployment and investor confidence, Britain's construction sector PMI and US factory orders. The Bank of Canada governor will be speaking this afternoon.

Watch out too for the thorny matter of Greek debt, which threatens to raise its ugly head again as bailout talks recommence.


* The 3% improvement on the exchange rates offered by a high street bank is based on an exchange rate comparison for a telephone transaction of £100k into Euros between Moneycorp and HSBC, Natwest, Barclays, Lloyds Bank, Royal Bank of Scotland and Bank of Scotland International Banking taken 7 times between April and November 2015. Moneycorp’s average margin for this period was 3.08% better than the combined average margin for the banks.

Latest British Pound News

GBP LIVE TODAY

Pound to Remain Supported Against Euro, Dollar Despite Supreme Court Ruling Argue Analysts

24 January, 2017 |

The British Pound has slipped against the Euro and US Dollar following a ruling by the UK’s Supreme Court on the progress of the Brexit process.

GBP LIVE TODAY

Pound to Euro Exchange Rate: Rally Not Yet Dead Despite Supreme Court Ruling

23 January, 2017 |

The British Pound will focus on the outcome of the Supreme Court ruling on Article 50 – due to be announced Tuesday 24 January at 0930 GMT.

GBP LIVE TODAY

Turkish Lira Slides as "Turkish Central Bank Loses Credibility"

23 January, 2017 |

The Turkish Lira has been in a tailspin since October 2016 but it may recover on Tuesday if the Central Bank of Turkey (CBT) raise interest rates, as is widely expected.

GBP LIVE TODAY

British Pound Forecast to Rise Against Euro + Dollar by BNP Paribas

23 January, 2017 |

Pound Sterling is expected to stay above its recent lows against the Euro and Dollar going forward as the currency has absorbed its fair share of Brexit-inspired negativity.

GBP/EUR: News and Forecasts

EUR

UK Pound to Euro Exchange Rate Predictions: Pennant on Chart Suggests Further Gains

22 January, 2017 |

Since an initial leap higher, the conversion has been consolidating in a narrow range which has formed into what looks like a chart pattern called a pennant, as in the triangular flags which flew from medieval castle tops.  

EUR

Analysts Sceptical on Pound's Ability to Push Higher Longer-Term

20 January, 2017 |

Pound Sterling’s ride higher is a flight of fancy argue a number of institutional analysts.

EUR

Pound to Euro Exchange Rate Rate Forecast: 1.17 Next

18 January, 2017 |

The Pound rebounded strongly after Theresa May’s speech mentioned the involvement of Parliament in the process of Brexit.

EUR

ING: Euro to Strengthen Against Pound Sterling Today

18 January, 2017 |

Don’t be deceived by the British Pound’s recent strength warn analysts at ING.

GBP/USD: News and Forecasts

USD

Fresh Uncertainty = Pound to Dollar Rate Heading Back Down say ING

24 January, 2017 |

The GBP/USD exchange rate has only one place to go now that the Supreme Court has ruled Parliament is the only body that is able to trigger the UK’s exit from the European Union - down.

USD

GBP/USD Outlook: UBS, Credit Suisse, Lloyds Bank Short-Term Views

23 January, 2017 |

Credit Suisse, UBS, and Lloyds provide us with three different yet similar analysis views of where the GBP/USD exchange rate is likely to trade.

USD

The US Dollar is Still Going Higher, EUR/USD to Fall towards 0.95 say ABN Amro

23 January, 2017 |

This is not the end of the road for the Dollar, according to ABN Amro’s Roy Teo and Georgette Boele who have told clients the cyclical Dollar uptrend is not yet done.

USD

British Pound to Dollar Forecast: Gains to Extend say Analysts, Eyes on Article 50 Ruling

22 January, 2017 |

The GBP/USD pair is expected to continue its recovery higher following Donald Trump’s inauguration speech which was heavy on protectionism and light on infrastructure.  

EUR/USD: News and Forecasts

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For Euro / Dollar Rate, More Strength Looms

22 January, 2017 |

EUR/USD has the potential to rise this week if markets start to pull-back following Donald Trump’s inauguration speech.

Euro to Dollar

ECB Sends Euro Exchange Rates Lower with Dovish Assessment on Inflation

19 January, 2017 |

Don’t sleep through the European Central Bank’s key policy meeting today we are told.

Euro to Dollar

EUR/USD Still on Target for 1.08

18 January, 2017 |

Overall, we are constructive in our outlook for the EUR/USD exchange rate.

GBP/AUD: News and Forecasts

AUD

Pound / Australian Dollar Exchange Rate: Predictions for this Week

22 January, 2017 |

We are constructive for this pair's outlook and see risks tilted to the upside in the coming week.

AUD

Australian Dollar vs the Pound: GBP/AUD Could Break Below 1.60 but Charts Warn of Oversold…

17 January, 2017 |

Trading at 1.6091 at the time of writing but there is a good chance it could go below the support line at 1.60 we are told.

GBP/NZD: News and Forecasts

NZD

Pound to New Zealand Dollar Forecast: A Technical Reversal in GBP's Favour

22 January, 2017 |

We remain cautiously bullish and a break above the 1.7310 level would probably signal a continuation higher.

NZD

Outlook for New Zealand Dollar Marred by Fall in Dairy Prices

19 January, 2017 |

GBP/NZD, like most sterling pairs gapped down at the start of the week before rebounding on Tuesday, following Theresa May’s Brexit speech.

GBP/CAD: News and Forecasts

CAD

Pound to Canadian Dollar: Outlook Murky Due to Political Risks

24 January, 2017 |

The outlook for both the Canadian Dollar and the Pound are mixed due to a high degree of political uncertainty about the future.  

CAD

Pound / Canadian Dollar Outlook: This is Where GBP Strength Could become Apparent

20 January, 2017 |

Analyst Fawad Razaqzada at Forex.com believes it is against the Canadian Dollar where Pound Sterling could experience some decent gains.

CAD

The Canadian Dollar sent Lower by BoC, More Losses Likely

18 January, 2017 |

The Canadian Dollar has fallen sharply against major competitors after the Bank of Canada communicated it might be willing to cut interest rates in the near future.

GBP/ZAR: News and Forecasts

ZAR

Pound / South African Rand: More Upside Potential

23 January, 2017 |

Price charts are indicating more upside for GBP/ZAR.

ZAR

South African Rand vs the Pound: GBP/ZAR Turning Positive, 16.9500 in Crosshairs

19 January, 2017 |

GBP/ZAR gapped down on Monday and then reversed and surged higher after Theresa May’s Brexit speech encouraged Sterling bulls.

ZAR

South African Rand in 2017: a Game of Two ZARs say HSBC

16 January, 2017 |

Analysts at HSBC see the Rand as likely to have a year of two halves.

ZAR

South African Rand / Pound: GBP/ZAR Bounce Possible

10 January, 2017 |

The Pound to Rand exchange rate (GBP/ZAR) is falling towards its three-year lows as the long-term downtrend takes over and starts driving the exchange rate down again.