The weekend’s G20 meeting in Japan saw some thawing of trade relations between the US and China, helping support the US Dollar exchange rate and see some selling of safe-haven currencies. The Euro, however, is struggling in the face of differing opinions among European leaders as to who should be the next European Commission President, with the drag here being sufficient to lift even the Pound (GBP/EUR), which remains haunted by the risk of a no-deal Brexit. The move away from safe-haven assets has also seen the Pound soar against the Swiss Franc (GBP/CHF).
US Dollar Exchange Rate Gains on Positive Trade News
Gains are being seen for the US Dollar against major currencies including the Pound (GBP/USD) and Euro (EUR/USD) off the back of what the market has deemed to be productive trade talks at the weekend between the US and Chinese Presidents. Donald Trump has confirmed that further tariff increases on Chinese imports will be delayed, and there’s anticipation that the truce is likely to deliver some cheer for the broader US economy. As such, the aggressive spate of Federal Reserve rate cuts that many had been pricing in for the latter half of 2019 are being scaled back, with this translating into a stronger US Dollar exchange rate as a result.
European Commission President Talks Drag on Euro Exchange Rate
The Euro exchange rate is struggling in the wake of yesterday’s failure for European leaders to agree on a nomination to propose a new European Commission President. The position has to be ratified by MEPs and given the scale of this influential role, there’s no shortage of opinions as to who ought to be taking the helm. The European Union faces a host of challenges in the coming years, so the appointment has the potential to provide some significant influence over the future direction of the common currency. For now, however, a compromise seems some way off and markets haven’t been shy of highlighting the uncertainty by selling down the Euro. Against the US Dollar, (EUR/USD) the Euro has lost almost a full cent since Friday afternoon.
UK PM Contenders on Brexit
More has been seen from the final two Conservative Party leadership contenders over the weekend, specifically in regard to the technicalities of how they would handle the fall-out from a no-deal Brexit. Details of how each would plan to execute Brexit within 100 days of gaining office and renewed acknowledgement of the real economic impact this would have appears to have at least shored up the Pound against major currencies, although as noted above Pound-Euro (GBP/EUR) gains are primarily being driven by the current bout of inertia in the European Parliamentary process.
Update: The Pound has softened against the US Dollar (GBP/USD), Euro (GBP/EUR) and Swiss Franc (GBP/CHF) in Tuesday’s early UK trading as political uncertainty weighs and yesterday’s UK manufacturing stat lingers in the market. Additionally, data this morning has shown house price growth is continuing with sluggish growth, coming in at 0.5% on the year in June, down from the previous 0.6% reading.
Why Did it Move? Pound to Swiss Franc (GBP/CHF) Exchange Rate
The British Pound has jumped against the Swiss Franc (GBP/CHF), having added a full cent since Friday night’s close. Signs of a softening in the trade stand-off between the US and China is proving sufficient to see some of the risk aversion abate and this is driving investors away from safe-haven currencies. Having closed on Friday night at 1.2360, the cross has this morning traded as high as 1.2475.