Trade Gap Sends Pound to Euro and Sterling to Dollar Exchange Rates Lower but Rebound Today

August 10, 2014 - Written by John Cameron

STORY LINK Trade Gap Sends Pound to Euro and Sterling to Dollar Exchange Rates Lower but Rebound Today

Currency News UK - British Trade Gap Sends Exchange Rates for Pound to Euro and Dollar Lower, but Rebound Today - Another poor session for the Pound Sterling (currency:GBP) was triggered by a highly disappointing set of UK import / export figures, published on Friday.

The numbers revealed that Britain’s trade gap had widened to a monthly £2.459bn during in June – well ahead of analysts’ expectations of a showing of -£2.05bn. The release has sent the Pound to euro exchange rate down to as low as 1.2505 during this afternoon’s session – a long way South of the pair’s near-term high of 1.2700 which it touched off last month.

Monday's foreign exchange (rates) are as follows:

- The pound to euro exchange rate is +0.21 per cent higher at 1.25418.
- The pound to dollar exchange rate is +0.09 per cent higher at 1.67911.
- The euro to australian dollar exchange rate is +0.02 per cent higher at 1.44519.
- The euro to pound exchange rate is -0.21 per cent lower at 0.79733.
- The euro to dollar exchange rate is -0.12 per cent lower at 1.33881.

The Office of National Statistics figures revealed that the value of goods exported out of Britain had tumbled by £400m, thanks to a dip in outward shipments of manufactured goods and oil. Analysts have blamed the softening of demand on weak levels of economic growth in the eurozone – a key market for UK companies.

Elsewhere, the Canadian Dollar (currency:CAD) enjoyed a renewed bout of support this afternoon following the publication of domestic unemployment data for last month. The key numbers revealed that the overall level of Canadian joblessness had unexpectedly edged downwards to 7.0% last month.

However, the positive effect of the total unemployment figures proved to be more than offset by the Net Change in Employment numbers, which revealed that a barely-significant 200 new net positions had been generated in the vast Canadian economy. This was well below expectations of a showing of 24,000 for the key job creation number. Blake Jespersen of the Bank of Montreal concurred, stating earlier that, ‘the Loonie’s definitely trading defensively after an awful employment report, much lower than consensus.’ He went on to observe that, ‘full-time was down almost 60,000 -- that basically leaves employment in Canada flat for the whole year.’

Other notable events of note in the market today included another sharp increase in the levels of the VIX ‘fear index’, which spiked to as high as 18.17 on spread-betting sites overnight.

The shift upwards was driven by concerns over the situation in Iraq following the USA’s confirmation that it has launched air strikes against the Islamic State (IS) group in Iraq.

The move, aimed at heading off a humanitarian disaster in the troubled Middle Eastern nation. However, the impression grows that with the situations in Ukraine and Gaza, along with the ongoing surge in Iraq, the flight to safety from market participants has the potential to pick up momentum at a moment’s notice.

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