The US Dollar and Russian Rouble both declined in Monday’s European session while the Pound rallied, continuing its two-week winning streak against the Greenback (GBP/USD) and cracking through the key psychological barrier of 1.43.
US Dollar (USD) Exchange Rate Sensitive to Developments
The US Dollar wasn’t offered any support last week when the US chose to take action in Syria, and with the threat of fresh sanctions against Russia on the way, the Buck has had little to keep it buoyant. The White House has suggested that it may bring in sanctions against Russia following the nation’s support of the Syrian President Bashar al-Assad after the controversial chemical weapons attack recently took place.
Currency strategist Manuel Oliveri commented:
‘The military strikes were well telegraphed and we are seeing a continuation in the broad market theme from last week of a weaker dollar and favourable conditions for risk-taking.’
RUB Exchange Rate Takes a Hit on Fresh US Sanctions
While the Russian currency fell quickly in the first part of the session, the Rouble has gained some stability as the afternoon approaches.
Industry expert Arjun Divecha commented:
‘We don’t think the US is exercising the “nuclear option” of trying to tank the Russian economy. While it will cause pain in certain areas, we do not think this action will have a profound impact on the Russian economy.’
Pound (GBP) Exchange Rate Stronger as BoE Interest Rate Meeting Approaches
Sterling has been favoured by investors ahead of labour market and inflation data due out this week which should give the Monetary Policy Committee (MPC) at the Bank of England (BoE) the green light to hike interest rates at the upcoming meeting in May. While the UK Unemployment Rate is expected to remain the same at 4.3%, Employment Change is forecast to come in at 55K in the three months through February, while average weekly earnings are expected to rise from 2.8% to 3.0% on the year.
Global strategist Marc Ostwald stated:
‘With markets fully discounting a BoE rate hike, this week’s run of monthly indicators are anticipated to give the hike a green light.’
Inflation data is expected to stand solidly at 2.7%, although some economists have suggested it could take a slight swing higher. If the central bank were to hike interest rates at the upcoming meeting, it would be the first increase above 0.50% since the Global Financial Crisis (GFC).
The Pound to US Dollar (GBP/USD) exchange rate is trending at, 1.4303. The USD/RUB exchnage rate is trading at levels of 61.8695.