The Pound Sterling to Euro (GBP/EUR), Pound Sterling to Canadian Dollar and Pound Sterling to US Dollar (GBP/USD) exchange rates were all trading higher in Tuesday’s session ahead of the Bank of England releasing its March Financial Policy Committee Record.
UPDATE: The FPC suggested that the UK’s large current account deficit could become damaging and would therefore be under close watch.
Although the BoE suggested that no action needs to be immediately taken, the deficit could inspire negative UK sentiment.
The minutes read: ‘The committee agreed to keep their assessment of this risk under close review and would monitor the maturity and liquidity of the financing deficit.’
Earlier… The Pound Sterling to Euro (GBP/EUR) exchange rate is likely to fluctuate on any development in Greek negotiations next week, while the Pound Sterling to Canadian Dollar (GBP/CAD) and Pound Sterling to US Dollar (GBP/USD) exchange rates will fluctuate on oil prices and domestic data.
Pound Sterling to Euro (GBP/EUR) Exchange Rate Forecast to Rally if Greece Makes a Financial Deal with Russia
The Pound Sterling to Euro (GBP/EUR) exchange rate has been extremely sensitive to negotiations between Greece and its creditors since the whole process started in January.
European markets are closed for Easter holidays, meaning that when they reopen on Tuesday there could be some Pound Sterling to Euro (GBP/EUR) catching up to do just a few days ahead of the meeting between Russia and Greece.
Initially, the nations were expected to meet in May—a meeting that got pulled forward by Greece when everything appeared to be going wrong in talks with Germany.
However, if Greece is attempting to cuddle up to Russia for some kind of financial deal in an attempt to put pressure on Eurozone finance ministers, the Euro to Canadian Dollar (EUR/CAD), Euro to US Dollar (EUR/USD) and Euro to Pound Sterling (EUR/GBP) exchange rates could be in for some hefty downward movement.
If Greece does perform the much speculated about ‘Grexit’ and return to using the nation’s former currency, the Drachma, Citigroup chief economist Willem Buiter suggests the nation will be faced with an ‘economic show of horrors’.
Buiter suggests that the Eurozone will also face severe difficulties, saying: ‘Monetary union is meant to be unbreakable and irrevocable. It if it broke, and it is revoked, the question will arise over which country is next.’
Furthermore, if Greece ends up leaving the Eurozone and recovers successfully, a domino effect could occur spreading to other nations, potentially tearing the Euro and the currency bloc apart at the seams.
Pound Sterling to US Dollar (GBP/USD) Exchange Rate Forecast to Slip on Hawkish Federal Reserve Minutes
Meanwhile, the US Dollar could be in for extreme movement next week with massive data releases and Federal Reserve minutes due out.
Monday will kick-start US Dollar to Canadian Dollar (GBP/CAD), US Dollar to Euro (USD/EUR) and US Dollar to Pound Sterling (USD/GBP) exchange rate movement with the release of the ISM Non-Manufacturing Composite figure. The February index resided at 56.9 and any improvement in March could help the US Dollar rally.
Tuesday’s US Consumer Credit ecostat could offer moderate ‘Buck’ movement but most investors will be looking towards Wednesday’s US Federal Reserve Meeting Minutes release.
The minutes have the potential to throw the US Dollar exchange rate dramatically higher if any hawkish tones are used.
The second half of the week is much quieter for data and Friday will close the week with the US Monthly Budget Statement.
Any Federal Reserve officials speaking throughout the week could have a major impact on the USD/GBP, USD/CAD and USD/EUR currency pairs.
Pound Sterling to Canadian Dollar (GBP/CAD) Exchange Rate Forecast
The Canadian Dollar could have a more exciting few days by way of data next week, starting with Monday’s Canadian Ivey Purchasing Managers Index, Business Outlook Future Sales and Bank of Canada Senior Loan Officer Survey.
Canadian data will go quiet from then until Thursday’s Building Permits and New Housing Price Index releases. However, Friday’s Net Change in Employment and Unemployment Rate will be the star of the show when it comes to Canadian data next week and could seriously influence the Canadian Dollar to Euro (CAD/EUR), Canadian Dollar to Pound Sterling (CAD/GBP) and Canadian Dollar to US Dollar (CAD/USD) exchange rate movement.
Additionally, the price of oil is likely to fluctuate dependent on geopolitical tensions between Saudi Arabia and Yemen, as well as on account of global stores and production levels which are likely to weigh on the Canadian Dollar significantly if negative.
Thursday’s North American session saw West Texas Intermediate crude oil drop by 2% following a 4% rally on Wednesday after speculation emerged that production could be reaching its peak.
Furthermore, Goldman Sachs has weighed in on the matter, suggesting that US needs to limit production rather than the Organisation of Petroleum Exporting Countries (OPEC).
Goldman Sachs representative Michele Della Vigna commented: ‘I think the market has realised that where we need to find the adjustment is onshore US and that’s where the market is focused.’
‘The adjustment is starting to happen there. Clearly an OPEC cut would help getting to the equilibrium faster, but at the end of the day, it is non-OPEC that needs to sort out the oversupply that it has created.’
Pound Sterling to Euro (GBP/EUR), US Dollar (GBP/USD), Canadian Dollar (GBP/CAD) Exchange Rate Forecast
Meanwhile, the Pound could experience major movement with not only important data releases but also the Bank of England’s (BoE) latest interest rate decision to be aware of.
UK markets are closed on Monday, meaning Tuesday will begin the British data stream with Markit’s Services and Composite Purchasing Managers Indexes (PMI). However, Thursday is likely to be the key day for Pound Sterling exchange rate trading with the Bank of England’s rate decision announced and Trade Balance data published.
With the Federal Reserve releasing its meeting minutes just a day before the BoE rate decision, it could be an interesting few days for Pound Sterling to US Dollar (GBP/USD) exchange rate trading.
Friday will finish the UK’s four-day trading week with UK Industrial Production, Manufacturing Production and Construction Output ecostats.
At the close of the week, the Pound Sterling to Canadian Dollar (GBP/CAD) exchange rate was reaching 1.8660. The Pound Sterling to US Dollar (GBP/USD) exchange rate was trading at 1.4845; the Pound Sterling to Euro (GBP/EUR) exchange rate was trending in the region of 1.3629.
