Pound to Euro, US Dollar exchange rate: The Pound declined by around 0.8 cents against the Euro

Yesterday the Pound declined by around 0.8 cents against the Euro as Germany's Constitutional Court announced that it would not be taking into account a last-minute legal challenge as it endeavours to rule on the legality of the European Stability Mechanism. Yesterday the Pound declined by around 0.8 cents against the Euro as Germany’s Constitutional Court announced that it would not be taking into account a last-minute legal challenge as it endeavours to rule on the legality of the European Stability Mechanism.

Headlines

ESM set to pass German Court – new legal dispute ignored.
UK Trade Balance mildly improves – so does Sterling sentiment.
US credit rating warning – QE3 bets increase.
• Risk carries Antipodeans higher – AUD NZD gain versus GBP.

Sterling

The UK economy’s recent penchant for improvement continued yesterday as the UK Trade Balance figure for July improved at a faster-than-expected rate. Falling from -£10,068 to -£7,149, the UK Visible Trade Balance figures slotted nicely into the new-look template for optimistic UK ecostats and could help boost Gross Domestic Product in the third quarter. It was reported that the improved figure was largely thanks to an unexpected rise in trade from countries outside of the EU. The UK economy has been hit hard by the Eurocrisis, but it is an encouraging sign for Britain that trade has picked up from further afield.

Euro

Yesterday the Pound declined by around 0.8 cents against the Euro as Germany’s Constitutional Court announced that it would not be taking into account a last-minute legal challenge as it endeavours to rule on the legality of the European Stability Mechanism.

The ESM must be ratified in order for Mario Draghi’s Outright Monetary Transaction programme, heralded by some as the cure for the Eurozone debt crisis, to take effect. However, the fact that Germany’s Constitutional Court decided against postponing their decision was interpreted by markets to suggest that the European Central Bank’s bond-buying programme is set to be declared legitimate at today’s crucial ruling.

The single currency also benefitted from reports suggesting that the ECB were suitably pleased with Greece’s “significant steps towards budgetary consolidation and economic modernisation,” which paved the way for Greek Prime Minister Antonis Samaras to request a plea of leniency on the country’s current debt obligations. Samaras’ proposal would involve an extension on bonds due to expire in 2013 and 2015 which would significantly ease pressure on the struggling Greek economy.

US Dollar

The Pound rose to a fresh 4-month high of 1.6083 against the US Dollar yesterday as Moody’s said that the United States could lose its coveted AAA credit rating if policy makers do not handle the fabled ‘fiscal cliff’ in the correct manner. Sterling’s bullish run against the Dollar continued, with a daily gain of around 0.75 cents, as QE3 bets further diminished sentiment towards the world’s premier safe haven currency.

At the start of 2013 a series of prospective spending cuts and tax rises are due to take place in the US, however political pressures and fears of a ‘hard landing’ have thrown the new measures into doubt. This prompted the warning from Moody’s who have declared that the future of the United States’ triple-A credit rating depends on the Federal Reserve’s ability to bring down the country’s debt to GDP ratio.

Canadian Dollar

Long-term prospects of a Canadian interest rate hike mildly improved yesterday as a better-than-expected Canadian Housing Starts figure for August reflected positively on the Canadian housing sector. Housing Starts beat analysts’ predictions of 200,000 and rose to 224,900 which suggested that the threat of a housing bubble was decreasing in the Canadian economy – something that the Bank of Canada have been very cautious to avoid.

Despite this subtle improvement in rate hike expectations, the Pound to Canadian Dollar exchange rate remains largely unchanged from yesterday’s starting levels.

Australian Dollar

The Australian Dollar was boosted by Moody’s warning to the United States, which improved the chances of a new round of asset purchases from the Federal Reserve, and the German Constitutional Court’s decision to guarantee an outcome to its ESM ruling, which appeared to support the view that the ECB’s bond-buying programme will be pronounced legal and fit for purpose. Subsequently the Pound to Australian Dollar exchange rate declined by just over 1 cent.

New Zealand Dollar

The New Zealand Dollar benefitted from improved market sentiment towards a third round of quantitative easing from the US Federal Reserve and an increased chance of the European Central Bank’s bond-buying programme to pass the German Constitutional Court’s hearing. The risk-boosting sentiment allowed the risk-sensitive ‘Kiwi Dollar’ to appreciate against the Pound by around 1.5 cents.

Data Released Today

04:00 EUR EU to Announce Details of Banking Union

06:00 EUR German Consumer Price Index (YoY) (AUG F)

08:00 EUR German Constitutional Court Annoinces ESM Ruling

08:30 GBP Jobless Claims Change (AUG)

21:00 NZD Reserve Bank of New Zealand Rate Decision (SEP 13)

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  2. Pound to Euro, US Dollar exchange rate: The Euro managed to appreciate by around 0.4 cents against the Pound
  3. Pound to Euro, US Dollar exchange rate: The Pound lost out on 0.4 cents against the US Dollar
  4. Pound to Euro, US Dollar exchange rate: A strong Spanish debt auction sent the Pound to Euro exchange rate down by around 0.5 cents yesterday
  5. Pound to Euro, US Dollar exchange rate: The Pound to Euro exchange rate improved by around 0.6 cents

Article source: http://feedproxy.google.com/~r/ForeignExchangeOutlook/~3/JgP66ovW_30/

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