Vulnerable GBP dips on BoE stimulus speculation

Vulnerable GBP dips on BoE stimulus speculation

Sinduja Venkat

Good morning and welcome to today’s foreign exchange market commentary on 27th of May. 

Here are MyCurrencyTransfer.com’s top 5 currency highlights:

  • GBP vulnerable on BoE stimulus speculation
  • EUR advances on optimistic Germany survey results
  • USD unmoved despite positive Durable Goods data
  • Yen advances on BoJ stimulus move
  • CAD dips on declining oil prices

CURRENCY RATES OVERVIEW 

GBP/EURO – 1.1702
GBP/USD – 1.5134
GBP/CHF – 1.4551
GBP/CAD – 1.5629
GBP/AUD – 1.5696
GBP/ZAR – 14.5019
GBP/JPY – 153.291
GBP/HKD – 11.7492
GBP/NZD – 1.8705
GBP/SEK – 10.0522

Mid-market rates as of 2013-05-27 02:22 UTC

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Key releases in the next 24 hours that may affect currency date:

Australia: No Data
Europe: CHF Trade Balance (Swiss franc) (APR)
United Kingdom:  No Data
New Zealand: No Data
United States of America: USD Consumer Confidence (MAY)
China: CNY Leading Index (APR)
Canada: No Data
Japan: JPY Small Business Confidence (MAY), JPY Large Retailers’ Sales (APR), JPY Retail Trade (YoY) (APR)

GBP vulnerable on BoE stimulus speculation

GBP dipped against the greenback on Friday after disappointing data on mortgage approvals as reported by the British Banker’s association that this figure rose by 32,200 last month lower than the expected rise of 32,700 following an increase of 31,400 in March. This release raised further speculation on the likelihood of further quantitative easing from the Bank of England. The sterling continues to be vulnerable to the possibility that new BoE Governor Carney could back further monetary stimulus and this move would further weaken the currency.

EUR advances on optimistic Germany survey results

EUR advanced against the USD following an optimistic data release suggesting that Europe’s largest economy is showing signs of improvement. Surveys from Germany indicated that the business climate index improved at 105.7 in May rising from last month’s 104.4 which has caused German bond futures to display gains. Recently wages have been increased in Germany and consequently German consumers are spending more, a reversal in trend since September 2007, during the subprime crisis.

USD unmoved despite positive Durable Goods data

USD tumbled against its peers at the end of last week despite positive US durable goods data coming in. Durable goods orders increased 3.3% in April higher than the expected level of 1.5%. US stocks dipped lower for the third consecutive session after the surprising gains in durable goods orders served to increase investors’ concerns about the pace of the Fed’s stimulus efforts.

 Yen advances on BoJ stimulus move

Yen advanced to session highs over the 101 level against the USD following BoJ’s move to pump 2 trillion yen into its financial system to offset the imminent rise in bond yields. The 10-year Japanese government bond yield had breached its highest level in a year at 0.845%.

CAD dips on declining oil prices

CAD slumped against the USD in response to the overall trend of weaker global equity markets and commodities at the end of last week. Canada’s biggest export is oil, and its price continued to drop for the second session causing the CAD to fall 1% last week.

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