POUND STERLING
No UK data of note was due for release today, meaning that relative Sterling levels were determined by movements in other currencies. This caused the GBP EUR rate to push forward, as did the GBP AUD and GBP NZD rates, whilst the GBP USD rate remained under pressure. Tonight’s RICS House Price survey provides the next UK data of significance and it is unlikely to be positive.
NEAR-TERM OUTLOOK – NEUTRAL.
US DOLLAR
The Pound Dollar exchange rate (GBP/USD) is 1.5847
Global stock markets have come under heavy selling pressure over the past two trading sessions as global investors fear the worst for the European retail banking sector, (Paris’s Cac 40 has lost almost 9% of its value since Friday’s open). This has caused a shift into the safe haven of the US treasury bill by institutional investors, leading the US Dollar higher on the currency markets. NEAR-TERM OUTLOOK – POSITIVE.
EURO
The Pound Euro exchange rate (GBP/EUR) is 1.1606
The Euro has come under heavy selling pressure since the end of last week’s session in the currency markets. Investors are concerned about disagreements on the future direction of monetary policy between ECB governing council members following the resignation of the ECB’s Chief Economist Juergen Stark on Friday. With fears over the potential for Greek contagion to take down a leading European retail bank escalating, the future does not look bright for the Euro.
NEAR-TERM OUTLOOK – NEGATIVE.
AUSTRALIAN DOLLAR
The Pound Australian Dollar exchange rate (GBP/AUD) is 1.5285
THE Australian Dollar started the day on the back foot with Asian equities markets continuing the pattern of last week and registering losses overnight. Worse-than-anticipated Australian Trade Balance figures, released overnight, added to the selling pressure on the Aussie.
NEAR-TERM OUTLOOK – NEUTRAL TO NEGATIVE.
ARAB EMIRATES DIRHAM
The Pound Dirham exchange rate (GBP/AED) is 5.8200
The Dirham remains directly pegged to the US Dollar, so any relative strength, or weakness, in the USD is directly mirrored in Dirham movements. The Dollar has powered forward against the other majors over the past week as investors seek out a safe haven against a potential storm caused by the European retail banking sector. With both the Japanese and Swiss central banks intervening to actively weaken the Yen and the Franc on the currency markets in recent weeks, the Dollar is left as the world’s reserve currency of choice. This spells good news for investors holding Dirham-denominated assets. NEAR-TERM OUTLOOK – POSITIVE.
Read more: Olympus Wealth Management
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