In addition, the global economic slowdown should delay Federal Reserve and Bank of England (BoE) rate hikes which will be a positive for the European Central Bank (ECB).
GBP sterling, the official currency of the United Kingdom, Jersey, Guernsey, the Isle of Man, South Georgia and the South Sandwich Islands, 1 British Pound equals 1.56 US Dollar.
There were many currency losers from ‘Black Monday’ but the Euro emerged as one of the winners. With no major economic events on the calendar the currency markets will continue to be driven by equity flows and the key question ahead if whether US stocks can finally stabilize after two days of massive volatility that has shaken investor sentiment to the core. An uptick in inflation in the Eurozone’s largest economy would be Euro-supportive. Oil (WTI) gained almost a dollar. US second quarter growth data is also due out this week and any results which increase the odds of borrowing costs being left on hold until next year are likely to weigh on demand for the US Dollar.
The Pound Sterling to US Dollar (GBP/USD) exchange rate is now trending in the region of 1.5529 having seen a low of 1.5523 and a high of 1.5721. Before the weekend Australia’s Private Capital Expenditure report and China’s Leading Index/Industrial Profits numbers may inspire a last bout of ‘Aussie’ fluctuations. “I would expect verbal intervention to heat up, should euro head higher towards $1.20 [against the dollar] or dollar/yen trades on a sustained basis below 115”. Currencies in commodities economies including Australian (AUD) and Canadian (CAD) dollars are still being hit hard, said Callum Henderson, global head of foreign exchange strategy at Standard Chartered in a CNBC appearance Monday.
The Pound Sterling to Australian Dollar (GBP/AUD) exchange rate dropped to a low of 1.1912. He further believes that the China situation suggests a quick turnaround in the stock markets is unlikely to be seen, and hence he remains a seller on USD/JPY on any intraday recovery above 120.42, targeting 117.90 levels with a stop loss at 121.
The stock market slump pressured the price of key commodities lower and upped the odds of the Bank of Canada (BOC) cutting interest rates further before the end of the year – circumstances which left the ‘Loonie’ plummeting.
Sterling has Opposite Performance with the “Greenback” as GBP-USD Weekly Best Rate becomes 2-Week WorstUnlike the Euro, the US Dollar has had a reversed relationship with the Pound this week.