GBP USD Rate Gains On Draghi Comments, GBP AUD & GBP NZD Also Up

Published: Friday, 24 May 2013 14:00 BST - Written by Ben Hughes

STORY LINK GBP USD Rate Gains On Draghi Comments, GBP AUD & GBP NZD Also Up

It’s been a firmly ‘risk-off’ trading environment so far today in the global currency markets as investors steer clear of currencies with a high correlation to stocks. The big loser on the day so far has been the Canadian Dollar, causing the Pound to Canadian Dollar exchange rate (currency : GBP CAD) to accumulate by almost half of a percentage point to 1.5665 earlier. The Canadian tender has been particularly hard hit since the middle part of the week thanks to the publication of data in China which showed that activity levels in the nation’s key manufacturing sector are slowing. This, coupled with the continued easing of global crude oil prices, has made market participants reluctant to hold the Canadian tender.

With the major volume of the day about to start flowing in the markets as New York opens for business, it would appear highly possible that the flight to safety which has marked this morning’s European session will be continued in North America. If this proves to be the case, then expect further upside for the Pound to Australian Dollar exchange rate (currency : GBP AUD) and the Pound to New Zealand Dollar exchange rate (currency : GBP NZD).

Elsewhere, last night brought a rare piece of positive news for the beleaguered British economy. European Central Bank President Mario Draghi spoke in positive terms of the UK economy during his visit to London, stating that he has noted "encouraging signs of tangible improvements" in Britain’s economic situation. Draghi’s words may cause the Pound Sterling to gain support in coming sessions. The Pound has registered healthy gains against the US Dollar following Draghi’s words, sending the Pound to US Dollar exchange rate (currency : GBP USD) up to as high as 1.5135 earlier. It would appear that, in spite of this week’s disappointing April UK Retail Sales numbers, there may be further upside to come for Cable in the near-term.

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