Foreign Currency Insight : Improved US Factory Order Data Sends GBP USD Rate Lower

September 1, 2011 - Written by John Cameron

STORY LINK Foreign Currency Insight : Improved US Factory Order Data Sends GBP USD Rate Lower

The Pound Euro exchange rate (GBP EUR) is 1.1305. The Pound Dollar exchange rate (GBP USD) is 1.6232. The Pound Australian Dollar exchange rate (GBP AUD) is 1.5178.

The US Dollar once again took centre stage in the currency markets yesterday, with an encouraging set of US Factory Orders figures pushing the Greenback further forward.

The figures showed that US factory orders rose by a higher-than-expected 2.6% in July – this was the biggest rise in orders for four months, providing grounds for increased optimism that the world’s leading economic superpower may yet be able to avoid slipping into a double-dip recession. The data was particularly eye-catching because June’s counterpart figure had shown a contraction of 0.8% in American factory orders.

The positive US data saw the US Dollar gain support, with the GBP USD rate once again make a run at 1.6250, which is providing a strong level of resistance. A close below this level today would then set last week’s low of 1.6208 as the near-term target for GBP USD.

Meanwhile, in the Eurozone, there were more encouraging signs for the German economy as official figures showed that unemployment dropped by 8,000 in August. German Retail Sales figures for July were less encouraging, showing an annualised contraction of 1.6% for the month, however this number did not stop the Euro edging forward against the Pound on the day.

Elsewhere, yesterday afternoon’s annualised Canadian GDP data for quarter 2 disappointed analysts by showing a contraction of 0.4%. Expectations had been that the figure would show that the Canadian economy had stood still in the three months to the end of June. However any potential losses for the Canadian Dollar because of this worrying growth number were more than cancelled out by the highly positive Factory Order data from Canada’s primary trading partner, the US. Support for the CAD following the US factory order figure saw the GBP CAD rate briefly break down through the 1.5900 to touch 1.5885.

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