The Pound to Euro (GBP/EUR) exchange rate managed to climb by almost a cent on Thursday, while the Pound to US Dollar (GBP/USD) currency pair rose by around a cent and a half before retracing some of its gains.
Euro and Pound Climb on Italy and Brexit Developments
This week, the focus has been on Brexit developments, European data, and central bank decisions, as well as a global equities sell-off. The Thanksgiving holiday has seen US markets closed towards the end of the week, with a lack of economic data out of the States. investors in the Euro have been watching the state of affairs between Italy and the European Commission and the Euro gained some favour this week when it appeared a compromise could be made between the two sides.
It’s been a mixed week for Brexit. While Amber Rudd claimed a no-deal Brexit would be blocked by Parliament and suggested Brexit may not even go ahead, the Sterling exchange rate surged a few days later when it appeared that the UK and EU might have reached an agreement in principle. The focus will be on this weekend’s Brexit summit which could offer Sterling some further direction. However, once again, Theresa May’s position of power looks shaky at best.
US Dollar Exchange Rate Forecast to Fall if Fed Pauses Rate Hike Cycle
The US Dollar may begin to feel some pressure in the coming months as the Federal Reserve could slow its current pace of monetary policy tightening. Recent dovish comments from policymakers have caused some concern as to whether the pace of hikes could ease, although rates markets still largely expect an increase in December to go ahead.
South African Rand, Australian Dollar, Chinese Yuan Exchange Rates in Focus
The South African Rand hit a fresh three-month high against the US Dollar (ZAR/USD) this week when the South African Reserve Bank (SARB) hiked interest rates to 6.75%.
Meanwhile, the Australian Dollar to US Dollar (AUD/USD) exchange rate is on course for its worst weekly performance since early October. Investors ditched the Aussie in favour of safe-haven assets as equities slid into the red. Gold reached a two-week pinnacle as the sell-off took place.
The Chinese Yuan may have been pressured lower by trade wars, but if the US Federal Reserve eases up on hiking rates next year amid concerns of a global slowdown, the Yuan to US Dollar (CNY/USD) exchange rate may be given some opportunity to stabilise. Last month, the CNY/USD exchange rate reached a 10-year low.
The Pound to US Dollar (GBP/USD) exchange rate is trading at 1.2839. The Pound to Euro (GBP/EUR) exchange rate is at levels of 1.1288. The Pound Australian Dollar (GBP/AUD) exchange rate is trending at 1.7736.