Daily Currency Update

Pound Sterling

Ahead of the release of the UK’s Services PMI for July, the Pound Sterling to Euro exchange rate advanced back beyond the 1.43 level as investors responded to speculation that the sale of Royal Bank of Scotland (RBS) shares will attract foreign buyers. If today’s services report defies forecasts for a decline from 58.5 to 58, the Pound could extend its rally against the Euro and recover recent losses against the US Dollar.


With Producer Prices in the Eurozone declining and news from Greece in short supply, the Euro closed out the local session in a slightly softer position against the Pound. Whether or not the common currency gains today largely depends on how the Eurozone’s retail sales report prints. A sturdy increase in consumer spending would be Euro-supportive while a drop in sales has the potential to drive the Euro lower.

US Dollar

‘Cable’ returned to trending in the region of 1.55 on Wednesday as the US Dollar was supported by a sturdy increase in domestic factory orders. Although the figures for May were negatively revised, the 1.8% gain in June was in line with economists’ forecasts. While the day’s UK services PMI may see the GBP/USD exchange rate break out of its current trading range, the pairing will also be affected by the US ISM Non-Manufacturing Composite measure, which is believed to have risen from 56.0 to 56.2. The US trade data and ADP employment change report will also be of interest.

Australian Dollar

The ‘Aussie’ advanced across the board earlier in the week as the Reserve Bank of Australia (RBA) intimated that the domestic currency had weakened enough to warrant the removal of the ‘significant depreciation’ rhetoric. The central bank also left interest rates on hold and investors are optimistic that borrowing costs may remain static for several months to come in spite of the dramatic decline in commodity prices. An uptick in Australia’s Performance of Services index lent the South Pacific currency additional support.

New Zealand Dollar

Forex Update WednesdayThe Pound Sterling to New Zealand Dollar exchange rate surged to a high of 2.3833 overnight as the latest GlobalDairyTrade auction revealed another plummet in prices. New Zealand’s employment figures also fell wide of the mark, with employment change coming in at 0.3% in the second quarter, quarter-on-quarter, rather than the 0.5% expected. The participation rate also fell, with the nation’s unemployment rate increasing from 5.8% to 5.9%.

Canadian Dollar

Further falls in the price of crude oil, Canada’s key commodity, left the ‘Loonie’ struggling on Tuesday and demand for the currency was additionally undermined as the Royal Bank of Canada’s Manufacturing PMI dropped from 51.3 to 50.8 in July. The GBP/CAD exchange rate remained trending in the region of a 7-year high prior to the release of the UK’s Services PMI.

South African Rand

As the week progressed, the Rand dropped to a fresh 14-year low against the US Dollar amid fears that the South African economy is still struggling. The nation’s economic development minister asserted that the influential mining sector is in ‘trouble’, which could bode ill for South African growth as the year continues. South Africa’s Whole Economy PMI also printed at 48.9 today, down from 49.2 previously.

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