The Pound Sterling to Euro (GBP/EUR) exchange rate was trending significantly lower on Wednesday after the Bank of England (BoE) cut its growth forecasts, while the Pound Sterling to US Dollar (GBP/USD) exchange rate managed to trade higher after US Advance Retail Sales data and a downgrade by Barclays for US growth.
Barclays cuts US Q2 GDP growth tracking estimate to 2.6% from 3.0% after soft April retail sales. Also cuts Q1 estimate to -0.6%.
— Jamie McGeever (@ReutersJamie) May 13, 2015
US Advance Retail Sales Flop, US Dollar (USD) Exchange Rate Sinks
US Advance Retail Sales fell flat at 0.0% in April rather than recording the 0.2% forecast. However, the March US Advance Retail Sales number was positively revised from 0.9% to 1.1%.
Industry expert James Knightly stated: ‘US retail sales for April are softer than hoped, coming in flat on the month versus a 0.2% month on month consensus. Admittedly the March figure was revised higher by two tenths of a percentage point, but the overall story is one of subdued spending by consumers.’
However, the fall caused Barclays to downgrade its US Gross Domestic Product (GDP) growth forecast to only 2.6% from the previous 3.0%.
Earlier… The Pound Sterling to Euro (GBP/EUR) exchange rate flopped, while the Pound Sterling to US Dollar (GBP/USD) exchange rate remained in a tight range on Wednesday, despite a fall in UK unemployment, after the Bank of England (BoE) released it’s inflation report and BoE Governor Mark Carney spoke.
BoE Inflation Report Outweighs UK Unemployment Rate Fall Below Forecasts to Seven-Year Low, Wages Climb
The BoE inflation report signalled GDP growth cuts, but the Pound really took a tumble after BoE Governor Mark Carney suggested that a higher Sterling exchange rate was likely to keep interest rates lower for longer.
Hang on. Carney says growth downgraded cause interest rates to rise faster than markets expect. So is he dovish or hawkish? #GBP #BoE
— Joshua Raymond (@Josh_CityIndex) May 13, 2015
The Pound Sterling to Euro (GBP/EUR) and Pound Sterling to US Dollar (GBP/USD) exchange rates jumped higher on Wednesday after the UK Unemployment Rate took a surprising fall from 5.6% to 5.5% in March, and UK Average Weekly Earnings rose in line with forecasts, from 1.9% to 2.2%.
UK Unemployment Rate Drops, Average Weekly Earnings Climb, Pound Sterling to Euro (GBP/EUR), US Dollar (GBP/USD) Exchange Rates Trend Higher
With such favourable employment data it’s likley that investors will begin to price in a Bank of England (BoE) interest rate hike in the near future.
Unemployment rate drops to 5.5% and employment rate up to 73.5%. 202,000 more in employment in latest three months. Very good figures.
— David Smith (@dsmitheconomics) May 13, 2015
Earlier… The Pound Sterling to Euro (GBP/EUR) exchange rate was trading lower on Wednesday ahead of the Bank of England’s (BoE) inflation report and UK Unemployment Rate and Employment Change numbers, while the Pound Sterling to US Dollar (GBP/USD) exchange rate remained in a tight range ahead of US Advance Retail Sales.
Pound Sterling to Euro (GBP/EUR), Pound Sterling to US Dollar (GBP/USD) Forecast to Fluctuate on BoE Inflation Report, UK Labour Market Data and US Advance Retail Sales
The Bank of England inflation report is forecast to be relatively hawkish and could support the Pound Sterling to Euro (GBP/EUR) and Pound Sterling to US Dollar (GBP/USD) exchange rates significantly if predictions are correct. UK Average Weekly Earnings are also expected to increase which could help boost the Pound further. Meanwhile, US Advance Retail Sales are forecast to show 0.2% growth in April after the previous month’s 0.9% expansion.
The Pound Sterling to Euro (GBP/EUR) exchange rate declined significantly in Tuesday’s European trading after Greece made its latest International Monetary Fund (IMF) repayment, while the Pound Sterling to US Dollar (GBP/USD) exchange rate hit a three-month high of 1.5640 after upbeat UK Manufacturing Production and Industrial Production figures emerged.
Pound Sterling to US Dollar (GBP/USD) Exchange Rate Hits Three-Month High as UK Data Beats Forecasts
Tuesday saw the UK Industrial Production ecostat rise from 0.1% to 0.7% on the year in March, while the UK Manufacturing Production ecostat remained at 1.1%, rather than declining as forecast. The Office for National Statistics (ONS) has stated that the Industrial Production number was accredited to the largest month-on-month jump in oil output since February 2014.
The favourable data offers support to those investors pricing in a Bank of England (BoE) interest rate hike in the near future.
GBP jumps as both UK manufacturing and industrial production beats. We also think #BoE inflation report tomorrow could be hawkish #GBP #FX
— Joshua Raymond (@Josh_CityIndex) May 12, 2015
UK Political Shakeup, EU Referendum, General Election Aftermath Weigh on Pound Sterling to Euro (GBP/EUR) and Pound Sterling to US Dollar (GBP/USD) Exchange Rate
The Pound Sterling exchange rate has had an interesting time in the past few weeks; the run-up to the UK general election sent shivers through the market and as polls were so close, investors got cold feet and sold off the British currency. However, as the general election unfolded and a Conservative win became evident, the Pound Sterling to Euro (GBP/EUR) and Pound Sterling to US Dollar (GBP/USD) exchange rates jumped.
As Prime Minister David Cameron reshuffles the cabinet, there are several factors influencing the British currency, such as the possibility of an earlier EU referendum. An EU referendum would see UK citizens vote on whether to remain within the union or leave—an event that is likely to cause major Pound Sterling exchange rate volatility.
However, not everyone’s keen on the move, perhaps especially those in the EU.
Austrian finance minister Hans Joerg Schelling commented: ‘I think politicians have to act decisively. And when politicians believe they have to ask the people, it’s an indication that they themselves are not willing to make the decisions and carry the consequences.’
George Osborne is in Brussels on Tuesday for an Ecofin meeting in an attempt to improve the relationship between the UK and EU.
Osborne stated: ‘We come here with a very clear mandate to improve Britain’s relationship with the rest of the EU, and to reform the EU so that it creates jobs and increases living standards for all its citizens. I don’t think anyone’s now in any doubt that we will hold that referendum on Britain’s membership of the European Union having conducted these negotiations.’
‘We go into the negotiations aiming to be constructive and engaged, but also resolute and firm. And no-one should underestimate our determination to succeed for the working people of Britain, indeed the working people of the whole of the European Union.’
Pound Sterling to Euro (GBP/EUR) Exchange Rate Remains Soft as Osborne Treads Carefully at Ecofin Meeting
Latvia’s Ecofin representative has stated that George Osborne failed to raise the UK’s demands formally.
Latvian finance minister (holder of #EU presidency) says @George_Osborne did not raise UK renegotiation at #ECOFIN meeting
— Peter Spiegel (@SpiegelPeter) May 12, 2015
We did not receive any communication from @George_Osborne says @eu2015lv on today’s stunningly uneventful Ecofin
— Bruno Waterfield (@BrunoBrussels) May 12, 2015
Tuesday will be an interesting day for the Pound Sterling to Euro (GBP/EUR) and Pound Sterling to US Dollar (GBP/USD) exchange rates with any political developments likely to cause the British currency to fluctuate. Additionally, the Bank of England (BoE) is forecast to release its inflation report on Wednesday, which could cause some major GBP/EUR and GBP/USD currency pair fluctuations.
Euro to Pound Sterling (EUR/GBP) and Euro to US Dollar (EUR/USD) Exchange Rate Forecast to Tumble as Greece Edges Closer to Financial Collapse
Meanwhile, the Euro to Pound Sterling (EUR/GBP) and Euro to US Dollar (EUR/USD) exchange rates were offered some support on Tuesday when Greece made its €800m International Monetary Fund (IMF) repayment. There’s been heavy speculation on whether the nation would be in a position to make the payment, as it edges towards financial collapse.
#Greece completes latest #IMF loan repayment ~WSJ sources
— Yannis Koutsomitis (@YanniKouts) May 12, 2015
Greek finance minister Yanis Varoufakis warned on Monday that Greece’s financial circumstance is now ‘terribly urgent’ and hinted that the nation may be in hot water by the end of the month. If Greece were to run out of funds by the end of the month, an accidental ‘Grexit’ could occur. Such an event could see the Euro to Pound Sterling (EUR/GBP) and Euro to US Dollar (EUR/USD) exchange rates crash.
#Greece has confirmed it will pay IMF tomorrow. With that out of the way here are its upcoming payments #Eurogroup pic.twitter.com/BlL3Wx2tu9
— Open Europe (@OpenEurope) May 11, 2015
So here’s the catch on the IMF paying the IMF thing. The reserves need to be replenished within a month = Greece no money, needs a June deal
— Jonathan Ferro (@FerroTV) May 12, 2015
Wednesday’s forecast to be an influential day for the Euro exchange rate by way of data with the release of French, German and Eurozone Gross Domestic Product (GDP) numbers. Additionally, the European Central Bank will publish its latest monetary policy meeting minutes which may influence the way in which the Euro exchange rate trades.
US Dollar to Pound Sterling (USD/GBP) and US Dollar to Euro (USD/EUR) Exchange Rates Await US Advance Retail Sales and University of Michigan Confidence Data
Meanwhile, the US Dollar is awaiting some influential data this week, such as the US Advance Retail Sales and US University of Michigan Confidence figures released on Wednesday and Friday respectively.
However, Tuesday could see the US Dollar to Euro (USD/EUR) and US Dollar to Pound Sterling (USD/GBP) exchange rates experience some movement with the release of the NFIB Small Business Optimism and US Monthly Budget Statement. Additionally, US Federal Reserve Officials will also be speaking on Tuesday which could cause some major USD/GBP and USD/EUR movement.
Any hawkish remarks from the Federal Reserve or any upbeat data could cause the US Dollar exchange rate to rally as investors’ price in the possibility of interest rate hikes.
The Pound Sterling to US Dollar (GBP/USD) exchange rate is trading at 1.5688; the Pound Sterling to Euro (GBP/EUR) exchange rate is trending in the region of 1.3870.
