GBP/EUR, GBP/AUD, GBP/NZD Fall on Brexit; Aussie and Kiwi Reach Multi-Month Lows vs USD
01 December 2017 by News DeskThe pound tumbled against the AUD, NZD, and EUR exchange rates on Friday after a rally this week, on account of Brexit obstacles relating to the Irish border debate, while AUD and NZD hit multi-month lows versus the USD, say industry experts FC Exchange.
The pound slipped lower against the euro (GBP/EUR) on Friday after breaching the 1.14 barrier on Thursday. The pound to Australian dollar (GBP/AUD) exchange rate had also been trending significantly higher in Thursday’s European session, and the pound to New Zealand dollar (GBP/NZD) exchange rate had managed to climb over 1.0%.The sterling exchange rate has been offered some support this week on account of Brexit negotiations – reports have suggested that Theresa May could offer a divorce deal in the region of £50 billion, which could allow talks to progress onto trade. However, the pound softened on Friday as markets digested news that Ireland could stand in the way of developments due to disagreements over the border.
As the UK is leaving the single market and customs union, there needs to be a manned barrier between Ireland and Northern Ireland, something that the Democratic Unionist Party which buoys Theresa May’s government has opposed. This problem could hinder progress and prevent talks from moving forward. May’s in a tricky position as the DUP could cause political upheaval and slow talks down further if she agrees to the EU’s border requirements.
The UK’s manufacturing figure was also released today, which showed activity in the sector had hit a four-year high. The Markit UK manufacturing purchasing managers’ index (PMI) came in at 58.2 in November, up from October’s positively revised 56.6. Meanwhile, Eurozone manufacturing grew at its fastest rate in 17 years, with the headline index reaching 60.1 in November, up from 58.5 in October.
Markit economist Chris Williamson commented: ‘Companies are clearly expanding rapidly. Employment growth has hit an all-time high and business investment on machinery is trending sharply upwards, suggesting manufacturers are looking forward to the upturn persisting well into 2018.’
The New Zealand dollar has been knocked by a decline in business confidence which hit its lowest level since the Global Financial Crisis (GFC) almost 10 years ago. ANZ Bank Chief Economist Sharon Zollner commented: ‘A net 39% of businesses are pessimistic about the year ahead, the lowest level since early 2009, and a decline of 29 points from the previous month.’ The New Zealand dollar has fared particularly badly against the US dollar (NZD/USD) hitting a one-and-a-half-year low as the USD strengthened.
The Australian dollar has also registered losses against the US dollar (AUD/USD), hitting five-month lows. In November alone, the AUD/USD exchange rate fell by 1.2%, while the NZD/USD exchange rate dropped by almost 5.0%. Next week a host of influential Aussie ecostats will come to light and could give the commodity currency chance to move.
The pound to euro (GBP/EUR) exchange rate is trending at 1.1347. The pound to New Zealand dollar (GBP/NZD) exchange rate resides at 1.9712. The pound to Australian dollar (GBP/AUD) exchange rate trades at 1.7838.
Disclaimer: This economic update is provided by FC Exchange a Global Reach Group Company, industry leaders in foreign exchange. Authorised affiliates are permitted to reuse content.
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