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Pound Euro Depressed, US Dollar Unmoved by Data, Rand Hits Lows

August 8, 2019 9:59 am | Modified August 8, 2019 9:59 am
EUR, GBP, USD, ZAR | BY Lauren Bessent

Macroeconomic data is thin on the ground, and what has been released of late is having little impact on major currencies. The Pound – Euro rate (GBP/EUR) remains depressed despite poor German manufacturing data, whilst Sterling – US Dollar (GBP/USD) was unmoved by slow growth in US consumer borrowing. The worsening economic situation in South Africa has, however, proved sufficient to drive GBP/ZAR up to seven-week highs.

Weak German Economic Data Fails to Dent Euro Exchange Rate

Despite mounting fears of a recession in the Eurozone after Germany’s Industrial Production reading fell faster than had been expected yesterday, the Pound – Euro exchange rate (GBP/EUR) remains close to recent lows. The news from Germany was sufficient to provide some short-lived support for Sterling, but with an increasingly complex constitutional problem brewing in Westminster as Boris Johnson bids to force through Brexit at whatever price, confidence in the Pound continues to be lacking. The day ahead may be devoid of fresh fundamental data from the UK, but the European Central Bank’s economic bulletin may offer some further insight from the currency bloc. Hints at aggressive policy easing after the summer break could give Sterling the opportunity to nudge a little higher, but again, sustaining any gains will likely be challenging.

Falling US Consumer Credit no Cause For Concern

The British Pound – US Dollar exchange rate (GBP/USD) remains stuck in a narrow channel as markets wait for news of the next developments in the US – China trade war. Data released yesterday showed a smaller than expected increase in US Consumer Credit, although this appears to be causing little concern, with borrowers evidently using the current economic bounce to pay down debts rather than the news pointing towards a crisis of confidence. Again, macroeconomic data is set to be in short supply today, so it will likely be geopolitical developments that will precipitate any meaningful direction.

Why Did it Move? Pound to South African Rand (GBP/ZAR) Exchange Rate

The Pound – South African Rand exchange rate jumped yesterday, as economic data from the country continued to disappoint. The outlook for domestic growth is worsening, while credit ratings agencies are also becoming increasingly pessimistic over South Africa’s fortunes. Policymakers have stated that they won’t be turning to the IMF for help, but this latest move saw the cross jump to a seven-week high. Having traded at 17.13 at the end of July, the GBP/ZAR rate briefly moved above 18.45 on Wednesday, a rise of almost 8%.

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