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Sterling Slips Versus Euro, as Parliament to Vote on Brexit Deal

Welcome to Pure FX’s weekly summary plus outlook of the foreign exchange rates.

This tells you what’s affected the exchange rates in the past week, plus what may happen next, for your money transfer!

Pound to euro

Sterling slips and slides versus the common currency! The pound to euro exchange rate fell by -1.5 cents last week, to 1.125.

The pound weakened last week, because there's uncertainty about the UK's Brexit deal. In particular, it's thought that Parliament will vote down prime minister Theresa May's proposed deal this Tuesday, in which it's unclear if the UK will exit the EU next March with a "No Deal". What's more, sterling fell, as the enormous UK services sector hit just 50.4 in November, close to stagnation.

Meanwhile, the euro flew higher last week, though this was more thanks to Brexit uncertainty than Eurozone strength. For instance, it was confirmed that the currency bloc expanded by just +0.2% in Q3, slower than the UK and USA. This is because US president Donald Trump's trade tariffs talks are weighing on Germany's exports. Looking ahead, the Eurozone may slow further too.

Pound to Swiss franc

The pound to Swiss franc exchange stumbles! Sterling shed -2 cents against the franc last week, to 1.2575.

The franc triumphed last week, chiefly because Canada arrested top Chinese mobile manufacturer Huawei executive Wanzhou Meng, for breaking America's sanctions on Iran and bank fraud. Now, Ms. Meng will be extradited to the USA. It's feared that this may re-ignite America's trade war with China, thereby boosting the Swiss franc, as a trade safe haven from global political uncertainty!

Pound to US dollar

Sterling winds up where it began versus the buck! The pound to US dollar exchange rate went in a circle last week, to 1.2750.

The US dollar went to and fro last week, because there was cloudy economic news from the USA. In particular, America created just 155,000 new jobs in November, -45,000 below forecasts. On the one hand, this cuts the odds that the Federal Reserve will further hike interest rates, up to 2.5%. On the other hand, this job creation figure is still buoyant enough for solid economic growth!

Outlook

Looking forward meanwhile, the pound to US dollar exchange rate may remain up-in-the-air. This is because America and China's trade war truce looks to have broken, after less than a week of peace. Last weekend at the G20 in Buenos Aires, Presidents Trump and Xi Jinping agreed to broker a deal, yet now Canada has arrested top Huawei executive Wanzhou Meng for breaking sanctions!

Pound to Australian dollar

The pound to Australian dollar exchange rate goes for gold! Sterling rose by +3 cents versus the Aussie last week, to 1.7650.

The Aussie dollar went into reverse last week, first because Australia's economy expanded by just +0.3% between July to September, well below forecasts for +0.6%. In particular, Australia's consumers spent less, while wage rises Down Under remain subdued. In addition, the AU dollar weakened, as Australia's trade surplus shrank to AU$2,316m in October, easily below predictions.

Pound to New Zealand dollar

Sterling flies high and low versus the kiwi! The pound to New Zealand dollar exchange rate finished close to where it started last week, at 1.85.

The NZ dollar fluctuated last week, first because confidence among New Zealand farmers has fallen. According to Rabobank's quarterly Rural Confidence Survey, New Zealand rural confidence fell to -15% in Q4, far below Q3's result of -3%. What's more, the kiwi dollar lost out, as enormous milk co-operative Fonterra cut its forecast payout for New Zealand's dairy farmers, for 2018/19.

Pound to Canadian dollar

Sterling flies high then falls low versus the CA dollar! The pound to Canadian dollar exchange rate rocketed then tumbled last week, back to 1.6925.

The Canadian dollar initially plummeted last week, as top Chinese mobile manufacturer Huawei executive Wanzhou Meng was arrested in Vancouver, to be extradited to the USA. It's feared that this will worsen Canada's relationship with the world's 2nd largest economy, China. Then though, the loonie recovered, as Canada created an amazing 94,100 jobs in November, far above forecasts!

Outlook

That said, looking ahead, the Canadian dollar may soon weaken. This is because it's thought that global oil cartel OPEC will struggle to agree to cut oil production. As a result, global supplies of the black gold may rise, thus cutting oil's price. In turn, Canada will make less money from selling its oil and petroleum products overseas. This may slow Canada's economy, and weigh on the loonie!

Pound to Japanese yen

Sterling eases lower versus the yen! The pound to Japanese yen exchange rate fell by -0.94% last week, to 143.38.

The yen climbed up the ladder last week, first because of Canada's arrest of top Huawei executive Wanzhou Meng. This sparked concerns that the fragile trade pace between the USA and China may be broken after less than a week, prompting investors to place money in Japan as a safe haven. What's more, the yen rose, as Japan's factories beefed up production faster than forecast last month.

Pound to South African rand

The pound to South African rand exchange rate moves on up! Sterling gained +2.98% against the rand last week, to 17.94.

The South African rand went wobbly at the knees last week, because there's lots of global economic uncertainty, when the rand often loses out. For instance, US president Donald Tweet sent a Tweet last week that he's a "Tariff Man", fuelling fears that he'll put more tariffs on China. In addition, Italy continues to wrestle with the EU, over its planned 2019 deficit. So the rand lost out!

Outlook

That said, looking ahead, the rand could find its feet. This is because South Africa's economy expanded by +2.2% between July to September, +0.6% above forecasts. This has lifted South Africa out of recession. In particular, South Africa's economic growth in Q3 was fuelled by manufacturing, agriculture and transport. This bodes well for president Cyril Ramaphosa's reforms, and the rand too!

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Please bear in mind, this article is Pure FX’s opinion only and does not constitute advice. Moreover, the exchange rates referred to in this article are the interbank rates, which are the rates at which banks and financial institutions buy and sell currency to each other. Therefore these exchange rates cannot be accessed by individuals or SMEs, and are not the same rates that Pure FX can offer. To get a free exchange rate quote, call us on +44 (0) 1494 671800, or email peter.lavelle@purefx.co.uk.

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