Pound remains weak while euro stays strong

Currencies Direct September 23rd 2016 - 2 minute read

The pound has remained weak in comparison to the major currencies this week, trading poorly against the euro.
Meanwhile, the US dollar has seen a fall after the Federal Reserve’s refusal to raise interest rates. The Australian dollar capitalised on this.
Sterling does not gain any ground
The pound has not gained any real ground this week, despite UK public sector net borrowing beating expectations. It fell from £0.9 billion to £10.5 billion in August 2016, compared with August 2015, according to the Office for National Statistics (ONS). This was not enough to strengthen the pound, which remains weak against the major currencies.
Sterling then had an opportunity to rise against the US dollar when it was announced that the Federal Reserve was freezing interest rates, despite a number of analysts expecting it to be increased. It looked like the pound might capitalise on the decision from the US in the middle of the week, but this did not happen.
However, the pound did see a boost following comments by Bank of England (BoE) policy maker Kristin Forbes, who remained upbeat in insisting that further easing measures would not be necessary this year.
There are those who disagree with Ms Forbes, however, and there is a significant amount of concern about the long-term effects of the Brexit vote.
The euro stays sturdy
The euro was boosted by the US dollar’s decline after the Fed’s announcement, trading well against the greenback this week.
According to analysts, it has stayed sturdy as a result of the European Central Bank’s refusal to implement any further stimulus, which has given the impression that the Eurozone is faring well.
Markit Economics released official figures showing that the Eurozone’s economic growth was at a 20-month low in September. This could result in the euro dropping in value but it remains to be seen.
Mixed week for the US dollar
The US dollar has had a mixed week. It started with the Federal Reserve holding a Federal Open Market Committee (FOMC) meeting in which it was decided that interest rates would not be rising in the immediate future. This was despite a great deal of speculation by analysts that it would be increased soon.
The FOMC said that it had reached this decision following positive employment figures in recent months. However, the US dollar suffered as a result, falling against its major rivals.
As investors had more time to digest the news, however, the greenback appeared to recover some ground. As the week went on, the dollar gained more of the ground it had lost after the announcement. However, it is expected that it will end the week having lost value as a result of the Fed’s decision.
The Australian dollar gains in value
The Australian dollar has fared well against the major currencies this week, gaining in value against both the pound and the US dollar.
Illustrating this was the fact that the pound slipped to a monthly low against the Australian dollar this week.
Australia’s currency took advantage of the US dollar’s weak state after the FOMC meeting and rallied, performing well.


Written by
Currencies Direct

Select a topic: